Ash Carter Discusses the Business of Defense

force conversation from somebody who is not only brilliant. He's a Rhodes scholar, a PhD in in physics UM, but a historian who focuses on military history in the medieval times, and that has colored how he looks at at the world, how he looks at the role of government. I could talk about him for hours, but instead I'm just gonna say, with no further ado, my conversation with former Secretary of Defense Ash Carter. This is Masters in Business with Barry

Ridholts on Bloomberg Radio. My extra special guest this week is Ash Carter. He is the former Secretary of Defense under President Barack Obama. He is the five time winner of the Department of Defense Distinguished Public Service Medal that is the highest award to a civilian from the Pentagon. He is a Rhodes Scholar with a PhD in theoretical physics from Oxford, the author of almost a dozen books, most recently Inside the Five Sided Box Lessons from a

Lifetime of leadership in the Pentagon. Ash Carter, Welcome to Bloomberg, to be with you, Mary. So let's um. Let's start with your rather unusual academic career. You're a double major physics and medieval history. How do you end up with that? As a double major? Turned out to be useful. More on that in a moment, But at the time it was just a right brain left brain thing. I I I was fascinated by history, and particularly by medieval history, because if you think about it, the Middle Ages was

a thousand years long. So if you call yourself an evilist, you've just gotten yourself a whole millennium of territory. And I like the languages Latin, Greek, French, German UH to speak.

And it was the time when the church UH developed, when the university developed, when the English common law developed, when the nation state developed, So a lot of things we lived with today and I found later in life as I started working in the Pentagon in one and all the way until I left and in nineteen that that was useful training physics, history, useful training for the didn't of course. The joke is that I had the perfect of My job was the perfect combination of medieval

thinking and physics thinking. Physics was totally other side of the brain thing. It's clean, logical, uh, And I liked that. And then I had to make a choice for further training in the beginning of my career, and that was that was for physics. And then I got into the whole defense business by by accident. Um. But how did

that come about? Well, it was part It was remember the people who taught me physics, and where the seniors in the field that I was starting out in, which was elementary particle physics and big accelerators at Fermi Lab and Brookhaven outside of New York here and so forth.

I worked at those big laboratories. Those guys were all the Manhattan Project generation, and they had in their veins the idea first of all that when you that that you you should have relationship with the government, that doesn't mean that you They always did what you wanted to do,

but it was natural to try to help out your country. Uh. And second that with respect to technology and disruptive technology, which the nuclear weapons certainly was that the people who built it had some responsibility too into essentially control the technology so that we got the good out of it, which was ending the war with Japan, winning the war with Japan, and keeping the piece for fifty years with the Soviet Union without blowing ourselves up. So they they

taught me that we had something some responsibility. So one day, two of those seniors said to me, a guy who was involved in satellite reconnaissance, another guy who designed the first thermonuclear weapon said to me, Ashal, wait, wait, wait, let me let me interrupt you right here, because you can't just mention that and go by. You referred to the Manhattan Project. Are you talking about people like Edward Teller? And I traveled once with to Europe with Edward Teller.

The too. Particularly the particular people I was speaking of was Richard Garwin with Edward Teller, but it was really Garwin's design designed the I said, the first thermonuclear bomb, that is one that that combined fishing and fusion, and it blew up an island in the Pacific Ocean. It was very successful and much more powerful than the original

thousand times more powerful UM. And the other guy was the person who was very instrumental in putting the first UM essentially cell phone type cameras, digital cameras onto our spy satellites, be our old spy satellites in the old days would take pictures on film, big roles of film, and then when the film was all exposed, they would separate it from the satellite, put a little rocket on it. The rocket would slow it down, it would fall down

to Earth. Deploy a parachute and we'd fly an airplane next to the parachute with a hook on it, and the hook would grab the parachute reel in the film. We'd fly it to what in those days, the CIA did all of that interpretation right outside of washing Anacostia washing, and they'd fly it, they develop it, and they'd count how many Russian missiles and so forth. So that was the guy who was instrumental in turning that film system into a digital system. So they were the two, that's

the two specific people rich pretty pretty big technologies. Yeah, yeah, and those happened to be the two who said to me, once you go to Washington for just one year turned out to be thirty seven, just one year and work on a problem that was a big deal at that time, Barry, which was a Cold War problem of where what to

do with the m X missile. I recall that that was under Reagan trying to figure out how we could hide and shuttle all these missiles underground to hide them from Russian satellite couldn't target them, right, So I think the original plan, and I don't remember how much of this is from your book, and how much of this is male memory, that undred silos when a shuttle five

hundred missiles around, pretty impossible plan. It was certainly very unpopular because it would have paved over a big part of the Great Basin area of the southwestern United States.

It was actually the Carter administration's plan. Reagan looked at it and said that looks said, it looked like a Rube Goldberg thing, right, So that was to him a pretty ugly baby, this idea of of digging all these holes and then hiding missiles in him so he began this is all under um the concept of being able to survive a first strike in order to make sure our mutual is your destruction was in place exactly, because if we took the m X missile and we put

them out where the Soviets could hit them, then in a crisis, they'd say, well, our only way of surviving is to go for and that would be incentive for them to go first. And we seeing them thinking that way, I would say, well, we better get we better launched these before they destroy them. So one or the other of us is gonna start a war under those circumstances. We wanted to avoid that that situation. So anyway, that was the projects all in the past now and that

was effectively your first book. Yes, yes, after I did this, I wrote it which is essentially a technical book on that subject. Um. But uh, two things happened to me there, Barry, which I think is important to anybody who's choosing a career or at a crossroads in their career. Um. I found that in these Washington conversations I had something to offer that nobody else in the room had. Namely, I understood how it all worked technically, and the decisions were

very consequential. So for a young person to be able to make a contribution, to feel like they're able to make actually a contribution, not just watch, but make a contribution, and that the issues they're dealing with really matter. That's a that's a wonderful you know. It's a hugely inspiring creation. And so that's what got me caught the bug of of of defense. And I've been devoted to you know, defending our country and making a better world for our

children ever since. But it could have gone a different way, but for those two people who who inspire me. It's a good lesson to all of us, to to you. And now I teach people at a university. That's my way of continuing to contribute. But you give them a little nudge, and UH, in the direction of public purpose

and public spirits a good thing. Let's talk a little bit about UH, the Iraq War, and you go into quite a bit of detail in the new book inside the Five Sided Box Lessons from a lifetime of leadership in the Pentagon. What made the Iraq War such a uni nique fight relative to previous US military history. Well, from a managerial point of view, which the point of view that the book takes, UH, it was a cantra insurgency war rather than a war of one country with

another asymmetrical warfare is that we had. Yes. So the first thing is we had to learn that by by the way, I should back up a little bit Bari and say, of course, and the invasion of Iraq in two thousand and three didn't turn out very well. History says I have to say I didn't have the wisdom to oppose that at the time. I believe many people did not. I I'm I count myself among them, and I'm not proud of that, but I can't say I had better wisdom than anyone else. Anyway, we found ourselves

in in Iraq. And of course when I became first the number three in the department, and the number two, then the number one, all during all that time we were still fighting in Iraq. And here's what we got out of it. That um was in a way useful to today's very different strategic situation. Uh. We learned to stop working in the old Cold War moode, which was

that is was very superpower superpower versus super power. Moreover, the Soviet Union was this slow, lumbering, very predictable thing, and so you could have many year programs where you slowly built the perfect thing. When you're at war and people are getting killed or or kids are coming back with no legs, and my wife and I are at the hospitals every weekend talk, you know, meeting with them and talking talking to them there, then you're working day

by day. That's a very different pace and it's much better suited to today's competitive world because now as we turned back to Chi Russia as we much do we have, if we did that and tried to compete with them today in the old mood, that wouldn't work because people are moving faster today, technologies moving factor. So I again, nobody likes to be in a war for that long. Nobody likes to be dealing with issues like uh amputations and prostheses pts, all the things we had to learn.

But we also learned something about agility in the course of Iraq and then of course Afghanistan as well. And I was all in when I was in the defense department. I know some people don't agree with those wars, and we can talk about that later, but when you're there and you're responsible for them, UH, that was my highest priority. Every day I went to bed thinking about him. I woke up thinking about him either there's no choice. So let's let's talk a little bit about some of the

adaptations that some took place fast and took place slow. Um. One of the things you write about ore are the I E d S And two really interesting issues come up in that. The first is the concept of drones versus blimps. That some people on the ground wanted drones, which really are good at flying in circles for short periods of time, but you wanted full There aren't a lot of roads in Iraq. You wanted full coverage of where insurgents are bringing I E d S that could

hurt troops. How did that process go from let's get these expensive drones that will take two years to get into place to no, No, we could hang blimps. It will take us a really short period of time and have eyes in the sky on everything. And it began one morning when Bob Gates was secretary. He was the number one. I was the number three at that time, and on the and we were having a video teleconference, secure video teleconference with Cobble, and up on the screen

was Stan McCrystal, who is our commander there. And Stan says to Bob that he needs he has only fifteen percent of the drone coverage he needs. And Bob Gates looks at me with that. I was his top supply weapons buyer, and he said with that, what are you going to do about that? Ash look? And I thought to myself, how on earth am I going to get seven times a number of drones in a very short, very short period of time. So I get on the phone and I talked to stands intelligence head at that time,

who was General Mike Flynn. This is prey before those whole issues with his politics right right and uh, And he had a good reputation, he did, and I enjoyed working with I don't know what happened later I I lost touch with him. But anyway, when I began, I said, jeez, what do you what do you need all that coverage for that drone coverage? And it turned out that it wasn't to get the kind of film that only a drone could get. Only a drone can fly down a

long highway. Um, but they wanted persistent coverage over one base or one town. That's what they really needed. Satellites are going by, satellites zipping by, and their overall Australia when you really need them, drones you can do, but you have to They're much more expensive, and you have to fly them around in circles, and you need to pilot even if they were back in California as it

turns out. But yeah, a well trained pilot and a crew and somebody to make all the decisions very different weight. We came up with the idea of just putting a balloon up, and you put a helium filled balloon over the base. It's got a camera on it and the feed goes right down to the captain who is commanding that little outpost. And the reassurance that those guys had that when they went out on patrol they knew this

is full video infrared exactly. Why couldn't just the kind of cameras that are on the the helicopters that fly on looking looking at car accident and traffic patterns that guy, So, why couldn't those just get shot out of the sky. It's they tried. And here's first of all, the pressure of the helium inside is not very much. It's not gonna pop, and so every once in a while you

winch it down and sell up the holes. That's it's it's but the enemy, the bad guys would when it went up, not knowing that, take pot shots at it. We began to put UM microphones on that could I Yes, triangulate, and so if you took a shot at one of our balloons, a mortar shell fell on you a few seconds later. So the other I D question I have is in the beginning of the war, and you mentioned in your Troops coming home, lots of the humvees were

really very lightly armored. And maybe this is my memory, but the recollection of how long it took to get the humvees up armored and protect seemed like it took a long time. And then later on the anti I E. D. There's all sorts of interesting technologies to detonate these things from a distance. Why did that seem to take so long? Is the process to UM identify what you want, order it and get it delivered? Is it really that long?

Part of it was the bureaucracy was still working on that Cold War lumbering enemy mode where we'll deliver the perfect thing in five years. Even in the middle of a hot wall. You'd be amazed. I would call people up when I was in the so called acquisitions are And I would say, do you realize that on your desk is a contract that you're supposed to sign or audit, and that is I need that tomorrow. And it would be in the stack of this bureaucrat stack of papers.

And as soon as they became aware that this was a matter of life or death for literally, yeah, they'd pull it out of the stack. But you'd be amazed at how much of that I had to do every single day, even when I was Secretary of Defense, to push the system. But but we we did. At let's take the M wrap which is the vehicle you're talking about. Um. When M wraps first started to be fielded, there was another attitude which was, hey, look, this war is going

to be over in a while. I only buy something that's going to be good for you know, the army. You'll be around for a long time. We need to be thinking about what we're gonna want in twenty and thirty years and and and I that's not hot war thinking that's that's exactly right. There was a lot of that, conscious and unconscious. And you mentioned the two different types of dogs in the book. You mentioned there are bomb

sniffer dogs, and then they're attack dogs. It seemed that there weren't enough breeders to get enough dogs quickly, and you guys went out and said, let's go global and find these dogs that you guys could get very very quickly. Yeah, it turns out that the guy who was usually biding fighter aircraft and aircraft carriers and satellites and so were, namely me and drones and balloons and so forth, ended up learning how to buy dogs. And I learned a lot.

And you're right, in fact, there's more than one kind of sniffer dog. There are some sniffer dogs on leash and off leash, and some that work better and confined areas, and some that are comfortable with open areas. And different breeds have different predilections, and so you learned that, and then you had to source them, as you said, And the United States has kennels, but there weren't enough kennels

to supply, so we did globally source dogs. Thousands of dogs with great, great, great and became and this was a good side of outside of this, but became really good friends of the troops. They loved them, as people tend too, were able to take them back home with them at the individually not enough, but many sad The sad cases were when the dog died, which happened um, but especially if dogs were wounded or even if they were in the vicinity of an i e. Ed. It

was impossible to use them anymore. That they become very nervous at that point and all their training would go out the windows. Either have to sadly put them to sleep or or take them and try to find a home for them in the United States. Well, they they certainly served quite well. And and I think there's a long history of Canaan corpse in the military, isn't there? Yeah, I mean they're their newses. I went to dark are

high tech research arm looking for better news? Is electronic newses than the dogs knows and the people who know about electronics knows is say, don't they're not years and years years away. You got a ward a fight now, just gotten by yourself a dog. Amazing. You describe working in d C as quote being a Christian in the colosseum. You never know when they're going to release the lions, and have you torn apart for the amusement of onlookers.

How accurate is that description? And and how frustrating is it to work in a town like d C. Well, I got used to it after a while. I was there for thirty seven years on and off and associated with the department uninterruptedly since. So they never really released the lions that you didn't know. I went through four Senate confirmations, which was really what I was talking about

in that particular passage. And that's a time of great vulnerability in Washington, because anybody who doesn't like you can take a shot at you that or try to persuade some senator to put a hold on you. Came up unanimously for a Secretary of Defense. That's not many people. That's actually I think there were two or three votes, not personal about me, but uh, nobody voted against you. Either they abstained or they voted for you. Not a lot of people in d C get that sort of

love from the U. S. Senate. No, but there. I mean, I tried to earn it the old fashioned way. I kept my nose clean, and all those years I never had was investigated or or or anything. I never that's the normal course these days. That seems to be a little unusual, but typically people working in the defense department tend to put their head down to their job and keep their nose yes, and conduct is really important. The in the profession of arms, honor and trust matter a lot.

And if you can't trust people in small things, how can you trust them in big things like war. So for us it was a big deal. And when you're at the top up, you have to show example, and so it was. I always watched over my conduct and comportment and tried to make an example. Me give me. Let me give you a particular instance of that I described in the book uh barry Um. When I and many many many times, was in the Iraq and Afghanistan and it's hot as hundred twenty degrees. If I was

Secretary of Defense, you'd see the sea foreign leaders. You talk especially to our commanders and what we're doing, and and give them the direction that they needed. And then I'd meet with hundreds and hundreds of troops and you'd shake their hands and so forth. And I'd wear my suit out in the desert degrees, sweating like a wheel of cheese out there, and my staff would say, hey, sir, you know you can take your jacket off and the troops would say, hey, it's just us, Secretary, you can relax.

And I always kept my suit on. And here's why, because every time I shook one of those soldiers hands, we had a photographer take a picture. That picture would be sent home to mom. Mom would frame it and put it by her bedside or on the mantel. And I wanted to look the part. I wanted to look like you still, well, I do have my suit on, my flag and I wear and I would wear the same thing out there because I thought it was important that their mother understand that I was the coursie. She

didn't know me, she doesn't know the secret. She didn't care. She cares about her son, but I don't want to look like the guy who deserves to be sending her son to war. That was important to me, And that's a small example of how you behavior. Comportment, conduct matter a lot. I think they matter not only in the largest organization in the world, de Pentagon, but in any

kind of organization. And I obviously um uh dismayed uh times these days about conduct, I see um and I held people to a higher standard, and I fired people for things that you see today. We fired people for Lyne, for having sex with subordinates. All of these things were unfortunately happened um, but there was no doubt I was harsh on people, but they were even harsher on subordinates. Our rules are very strict about that, and um our

ethos is one of their conduct. Uh is a sign of character, and character is an increasing an aspect of leadership. And you can't give somebody leadership over troops if they don't have conduct and enough character. So let me ask you, I'm gonna throw two curve balls at you. The first is we ask our troops to go in harm's way and we make extraordinary demands of them and they come back home. Not directly under the Pentagon, but under the

v A. They haven't been getting really terrific treatment. We have a number of veterans in my office and I've heard some pretty horrifying tales. What's going on in the v A and what can we do to give our veterans the sort of care they deserve. Well, the v A is a very very complicated bureaucracy. It's separate from the defense, and in most countries they would be managed together, but they're managed separately. That's interesting. Yeah, and it would

be part of the defense budget. But it's not part of the defense budget in this country. But it's a separate cabinet department. Should it be should it be part of the Pentagon and the defense budget. It may be that if we could start over again, that would have been a better way to manage things. But now I think mushing to organizations. Remember we tried that in the Department of Homeland Security and did it well. It took ten years or so began before it began to show

any results. Um. But any rate, so the v A has a difficult job of taking care of what is largely a geriatric medical population. Whereas our medical system which is huge in the defense departments, the largest in the country. And so you run the largest medical center in the medical care system in the country if you have the Secretary Defense. Um, but it's it's has a lot of pediatric work, right because our young people have children, so

they're completely different populations. Um. What we were doing a bad job of I discovered when i UH started to run the place was the transition from a soldier to a veteran, which is a very challenging transition. It is because remember some of these people have never done anything else but be in the military. Some of them are kids that came out of high school, went in for

a few years. They've never had a civilian job. I discovered that our separation program, what we did with soldiers and sailor's aerband and marines before they left service, was essentially to teach them how to get on welfare. Really yes, And of course that was revolted by that it's not good for them and it's not good for the public that's paying for these things. So we designed a new transition program that that had three tracks. One was to get a job track if you never had to get

a job. Let's tell you how to make a resume. Let's tell you how to get on some of these social media where you can describe what you're good at. Let's tell you how you can describe your in civilian terms, the skills you've got as a military person. Second track was entrepreneurship, like how do you run a McDonald's franchise? And the third was continue in education if you want to get on the g I bills some further education.

So we turned it from a uh, your life in the future is one of pendency upon the v A and getting benefits to you too. You've got a life ahead, let us help you prepare. And of course they're still qualified to get the benefits, they still just still preserve them. But to just to teach them right away to get that it's all about social safety net when they get out, that's no way to treat someone. I will tell you from my personal experience, the veterans who work in my

office are our secret weapons Logistics Trading CFO. It's amazing. And every time we look to hire somebody, we try and say, is this person that a veteran can feel that? Verry, you know that's new and I always really, well, it is.

It's only in the last ten years because I started working on veterans and commitment when I was the under secretary the number three job back in two thousand and nine, and employers would say, okay, Ash, we promised to hire five thousand veterans a big company, and they'd put it on their TV ads and everything, and they acted as though they were doing us a favor. By now most employers have the attitude you just described. We'll train the smart, honorable. Yeah. Absolutely,

And go back even further to the Vietnam era. And if I don't know, and I don't know what I would have done as secretary, I couldn't have stood to see our people treated that way. I mean, now you go to the airport and they're boarded first on the plane and all, you know, and that kind of thing. Some of that is making up for the mistakes of the Vietnam Era. Yeah, one of the the most moving things you can do as a current Secretary of Defense

is to talk to Vietnam era veterans. And a line that not only I use, but others including the President used, uh uh was just in case nobody said this to you when you came home the first time, welcome home and you their tears in the eyes. I could imagine some of these guys because of the way they were treated. That would have broken my heart at the time. Fortunately, I live in need live in that year. I live in near where most people have any attitude that you do,

which is these guys deserve a good job. I think we learn a little bit from our our societal mistakes in the past that that war was problematic. But then you know people who were um and that was not a voluntary army. That was a people were drafted. They should not have been treated the way they they were when they came back, But that was a very different time.

Let me throw the other curve ball at you, which is what you just brought up some of the issues we're hearing about people dealing with within the military, within the um Department of State, just generally within the government, moving away from the concept of honor and responsibility and truthfulness. What does this say about us as a country? How have we gotten so far off track? Well? I I think that in part it is a reflection of the attitude that some Americans have had that the government is

a thing apart from them. And I've obviously been in an out of government my whole life. I don't have that feeling. But I can well imagine if I were someone who've been outside of the government, that that that idea that that's a thing apart gaining ground in my mind. But to me, the government is just us. It is the way we do things that we have that have to be done that can't be done by individuals or

by companies. Who's going to build the roads, who's going to educate people, who's going to fight for us and win against enemies unless we do it all together. Now, I learned that by association with the Defense Department, which which most Americans really understand. Okay, that's a part of the government I really, I really get. But the other parts, the regulatory parts and all that. There came to be an attitude that we took all the good for granted

and we picked at what was bad. And there's plenty of things that are bad, and I think the government ought to be uh as high quality as it can be. But there was a little bit of that in our society. And then some of the people who are in government today seem to be looking at it as something to

a pillage at last, rather than a sacred trust. That's hard for me to relate to, let alone condone um, but I think it's enabled in part by people taking for granted what the government does for them, and also by government not living up to public expectations. So both sides of the equation need to change their attitude, because we do need a competent government. It's a competitive world, it's a dangerous world, and um, we need things, uh

that only government can do. Quite quite interesting. So let's talk about some of the interesting things you go over in the book. Um, I'm fascinated by the future of warfare. Is it just gonna be drones and robots? What sort of battles are we going to be fighting? And how is the world going to look different from a military perspective than it does today. So let's take a few

of the pieces. Um. I ran the F thirty five Joint Strike fighter program, started the new B twenty one stealth bomber, and I think those are once you get them under managerial control, important things. But Barry, they're the last man fighter and man bomber will ever build last man A That's what I believe. I think that's the last. What about ships? And we're gonna still have man take the aircraft carry? Now, aircraft carriers are getting harder and

harder to defend against countries like China and Russia. And people ask me, is the aircraft carrier going to go away? And I say no, because an aircraft carry is good for a different kind of circumstance. An aircraft carry is still good with the with respect to Afghanistan. The counter isis campaign environments in which nobody's going to sink the ship they provide America a floating air base, and that's an important thing. But I don't think we'll be trying

to use them against China and Russia decades from now. Soldiers. You just said, are robots gonna be soldiers? I think what will happen first is that in an infantry squad there'll be one or two robots that carry Oh, all the batteries get way down soldiers today they have so much electronics and they have spare batteries for everything that carry the electronics. And also that if they're let's say, clearing a house, is the first thing through the door of the house. You see a little of that already

because what what disarms? And I e ed now a little screaded small, But I worked. I worked on them because we had people walking out in suits with a pair of wire cutters, very dangerous thing to be doing, and so why not have a little robot to so you see now, I think that they'll be inch by inch more and more of that taking away. Some of

them were mechanical and more dangerous jobs. But they'll still be a squad commander, I think, making the decisions about fire and maneuver and when to do things and when not to do things. One thing that's not going to go away. We're talking about things that are going to go away, and they're not going to go away are

nuclear weapons. And let's think about that a little bit, because that is something that because of the wars in Iraq and Afghanistan and the fact that many people, not myself among them, but many people recognized too late that China and Russia we're not turning out the way everybody had hoped in the nine nineties. We hope they were going to turn out okay. They didn't turn out okay. And for both those reasons, we uh stopped improving or really just keeping up our own nuclear arsenal. And in

the meantime, they kept building, kept building, kept building. These things aren't going anywhere. I don't think we need new types. I don't. Nuclear weapons are just brutally simple a bomb on a rocket, right, Um, But I think we need them to defend ourselves. And basically the only way you can defend yourself against nuclear weapons is through deterrence, and um,

we haven't built any for twenty five years. I think I am a strong supporter of recapitalizing our nuclear weapons arsenal, and anybody who thinks that's going to start at arms race. I would say, well, you don't have twenty five years of history on your side, because we haven't done anything for the last twenty five years, and they've been racing anyway, so we still be the cause of them. So let's

stick with nukes and talk about Korea. You were involved as a very junior person back in with the first round of Korea trying to get a nuclear weapon. Why this is hindsight bias, obviously, but why don't we just stop them back then, years ago before they had the chance to retaliate. Well, it's interesting, I want I spent about half the year as an assistant secretary of Defense, meaning where is that in the hierarchy, that's like the third layer down? Okay, working on UH strike plan against

the North Korean reactor, which is all. They had the reactor at a place called Young Beyond, and it had the fuel rods that had plutonium in them, and the they had finished their fuelling cycle, and the North Koreans could if they wanted to take those fuel rods out, extract the plutonium, and they had enough in there to make one bomb. We thought that it was a cause of war, and so I built that plan to destroy

that reactor, which I was at the time barrier. And this is just the pride of the artist, I guess proud of because it would have destroyed and operating nuclear reactor without creating a radioactive plume um but mopefully, I was pretty certain. I was pretty certain. Now. Of course, I didn't want to do that because the certain result of that would be the North Korean Army streaming over the d m Z and a war beginning, which I

was confident we would win. But a soul would change hands twice and it's an ugly baby, uh as a war to contemplate. But I thought that was going to happen. And Clinton was really yes, and he was threatening that to who's the grandfather of the current guy, Kim jongun

that you see meeting with President Trump. His grandfather Kim Il sung was running the place then, and Kim Il sung rather unexpectedly said, Okay, I'll give up this reactor at Young Beyond if you build me some real Western reactor that can are power plants and that don't have all the proliferation problems. Did we do that? And we signed that agreement and it stayed in force for five

six years. The North Koreans under his son slowly began cheating and the whole thing kind of began to fall apart later in the night, when we bought ourselves out of five six years. Then we had talks again in the late nineties. I was part of them. Then, Uh, let's see, Condi, Rice and and Colin Pale had some more in two thousand and six. So I've seen various cycles of this and what about the current cycle, Well, that's not, unfortunately going anywhere. I don't object to talking

to the North Koreans. As I said, We've done it in the in the past. Um, no president that I worked for, going back to Reagan, would meet with the North Korean leader unless until there was an agreement. Explain why,

because they knew that. To the North Koreans, that was a huge gift a meeting with the American president because in North Korean propaganda that they can tell there are people everything's okay in our system, which is a disaster for the North Korean people, is actually successful because I got to meet with the American president. You look at us, where the equivalent of a superpas So when you're dealing with a potential enemy. You don't in Ash Carter's book,

you don't give away anything for free. So I wouldn't give away a meeting with the President United States for free without some exchange. Now, yeah, now we gave Now we've given it away. We also stopped or curtailed our exercises in South Korea, which is a very dangerous move. Remember, the exercises are how we keep us and our South Korean partners sharp. To make it the North Koreans absolutely clear that if they start a war, they will be destroyed and that will be the end of the regime.

And that's what those exercises demonstrate. To To not keep up that proficiency and not keep demonstrating it risks of war on the Korean Peninsula, which as I said, would be a war we would win, but would not look like anything are people have seen since the last Creating war. I mean, the intensity of the violence is unbelievable in

that war. Although some people have argued that the North Korean troops once they're over the border might not be as aggressive a enemy as some people have suggested, similar to the Iraqi National Guard. Well, it's interesting, Um, you don't have much evidence on your side. If you have that view, well, here's some evidence that goes but it

all goes the other way. North Korean agents military agents captured in South Korea who have been preparing sabotage and other things that they intend to do in the course of the war like that, um very few of they're all so brainwashed that they do not turn compliant. They don't come down into this well lit, wealthy society and change their views, even though all of their propaganda and all of their media and so forth have told them

that it's a poor and backward place. So if you think about it, Barry there in their third or fourth generation of Stalinism. No other society had that many generation. What that means is that your parents don't tell you stories of how things used to be different. Your grandparents don't tell you stories. There's nowhere if your memory is, that memory is gone, that there's a different kind of world.

So I I think the evidence suggests these people are brainwashed deeply enough that they'll fight really hard before they get tempted by all the good ease down in South Korea. Let's talk about another nuclear program. I ran We've had a couple of interesting military actions by other countries, namely Israel blew up a reactor. I don't know how many decades ago that was, and then the whole centrifuge hack UH set them back quite a bit. How close is I ran to building a nuclear weapon? And what should

we be doing about that? We had a treaty, this president UH decided to overturn it. Where are we with I ran in there? Well? Obviously the treaty was controversial in the United States has has rejected it. In the meantime, however, it bought us some time because while they were abiding by it, and while it was in force, the Iranians were obliged to destroy a bunch of centrifuges, send a bunch of plutonium to Russia, I mean uranium enriched uranium to Russia, and destroy a reactor. And they did all

that before we backed out of the treaty. So we got some goodies so to speak, um in exchange for US releasing frozen funds that were that's right, that from the late Ages, which turned out not to be as much as the Iranians wanted. So maybe in time they would have left there. Anyway, what's done is done at the time that that agreement was negotiated, I was Secretary of Defense, and as I I tell a story in the book which is indicative of how we looked at

things in the Pentagon. The morning after UH that agreement was concluded by Secretary of State Kerry, I sat down as I always did with the Chairman of the Joint Jesus stabbed a little round table in the Secretary of Defense always been there since since George Marshall's day, and I would sit there with Marty or later with Joe Dunford every morning that we were both in town, and also the vice Chairman and the Deputy Secretary Defense, and we'd say, Okay, what do we know? What do you

what do you need today? And the Marty said to me, as Secretary, the A proposed this Iranian agreement, what are your instructions to the Department? And I said, change nothing. Really, I said, it changes nothing. We have a strike plan that will destroy the Iranian nuclear program by force if we have to. We're gonna keep sixty five troops in the Gulf a deterrent against Iran, also carrying out the

Worgans dices um will continue. We have to continue to counter Iranian malign influence everywhere else, which is lots of places uh, Iraq, Syria, Yemen, and so forth. So I said, don't change anything. What this does is take off our plate a headache that we would otherwise have, which is somewhere down the road we would have to face an Iran that had nuclear weapons. Uh. And that is why

I thought I didn't object to the agreement. I supported the agreement because as Secretary Defense, it took a headache off my plate. But I had lots of Iran headaches on my plate, and I said to Marty, let's keep working on all the other headaches that Iran is. This is not could never be a grand bargain. So let's talk a little bit about I Ran and Iraq. I thought the best argument against invading Iraq and oh three

was the enemy of my enemy is my friend. Ends We may not be fans of Saddam Hussein or Iraq, but they were the regional counterbalance too. Iran am I oversimplifying that or is that I'm not? That was our That was our actually conscious view during the Iran I Rock war, which is a pox upon both albus let them fight each other into the ground, and that seemed like a good outcome, And looking back now, you're at

what the Middle East has become. A a country that kept order within its borders, that was not capable of major aggression against its its neighbor, which Irraq was. You'd otherwise leave alone as long as it wasn't doing anything to US America. What we thought might become a threat to US was the whole weapon of mass destruction thing. But we knew that was nonsense from day one. The whole Chainey separate department of anytime someone says, yeah, yeah, they N S A and C I A. Those guys

don't know what they're doing. We're gonna set up a little division in the basement of the White House. You know, that's just a nonsensical approach. You can't say that, but I can say that. Okay, I not only I wouldn't I say that, but because I didn't see that at the time, I'm just being honest. I'd like to say I was apprecient, um, but I actually bought what Colan

pal said. I thought that I, in my experience in government, with that much smoke, there had to be sot fire uh somewhere, And so I was disappointed and of course it didn't turn out very well because we did uh take away the government of Iraq and what was left was no government at all, and we've been dealing with the consequences of that. So let's do a compare and contrast, because the fascinating thing about Iraq is the George H. W.

Bush invasion. In is that no one? So he famously said, We're gonna chase Iraq out of Kuwait, but we're not going to talk. We're not going to keep going to Baghdad. As some people have suggested, Hey keep them going and let's just topple on the theory. I assumed that I ran as a problem. Let's let Iraq be there as a counterweight. Why, first of all, am I right in saying the senior Bush's approach was the right decision? Was

the right approach at the time. So what was the thinking in OH three let's keep going and take bag Dad out as opposed to because we clearly won the war in the first six weeks. It was over like that because its intention in OH three was specifically to topple Saddam. Remember the intention of the war was to recapture Kuwait, Okay, and then when when that was done, President Bush said another. Now there were some and Dick

Cheney was his Secretary Defense. And I was on the advisory board to Dick Cheney at that time, and I knew him at that time, and he wanted to go all the way to bag guttons and let's finish this off once and for all. The President overruled him, and

that was controversial at that time. Now fast forward a little bit more than a decade, Dick Cheney is now Vice President UH with some unfinished business, with some unfinished business, and so in retrospect, it seems that that was an ingredient of the decision to UH to invade and all this stuff about weapons of mass destruction and so forth, which I think was the ordinary citizens reason for supporting the OH three invasion. We turned out not to be

a reason at all. So let's roll back to nine eleven and the two thousand one attack, which came from Afghanistan and Saudi Arabia, not Iraq. You have a really interesting role, not only in the creation of homeland security, but post not eleven. Where were you on September eleventh, two thousand and one. I landed in Washington. I must have taken off on a aircraft from Boston at eight o'clock, just like some of their planes. The town must have

been in that same line waiting to take off. I landed a National airport and I looked out the windows we taxied and there was a huge cloud of smoke over the Pentagon Cla Okay, a place I'd worked getting out of for years and years. This huge plumes and you know what else was in it? Was striking about that Barry, guess what else was in there besides smoke? Paper? It was a huge you hit it office building, so you get is a big plume of of paper and I so I thought, well that's odd, but I didn't

know what the reason. Then I walk up the ramp, look at the TV screen in the terminal and I see two towers, and then I know exactly And not only did I know what was going on, but I did it right away, and I knew it has been laden well. He tried to hit the towers pretty so i'd know that. Remember for most Americans, this is like the Martians had land. You know, Osama who and where you come from? Wild earth? Is he doing this? I knew right away? Um, and so I, and I began

to try to help as best I could. One of the issues was Tom Ridge became the Highland Security Secretary, and I tried to help there get our government better organized. So what was your role with the establishment of the Department of one Land Security? You were? You were? I I offered an alternative to that. I was not in favor of setting up a formal department. I I thought that the Office of Home Land Security UH could be improved. But when you create a Department of Homeland Security, in

people's mind that brought together all our makes sense. Well it doesn't because if you still have the problem that DHS doesn't include the Defense Department, it doesn't include the colligence community, it doesn't include law enforcement. So the issue still remains, how do you bring everybody together so instead of terrorists. So it it creates what looks like a little bit of bureaucratic tidiness, but it doesn't get to

the core issue. So instead of having a coordinated response from all these different resources, it's just one more bureaucracy that tries to pace together some organizations that haven't worked together in the past, and they spend all this time on themselves, not only not on the enemy. So I thought I wouldn't have done it, but we did do it, and then I tried to help it make it uh work and for the Defense Department to begin to play a stronger role in counter terrorism, you've got to decide.

We thought we needed to decide, is terrorism crime, a disaster or an attack. Have it's a cry, you send the FBI, the disaster you send FEMA, And if it's an attack, you send the Department of Defense. But in the real world, they're all three and the president. If you think about the president, If I'm Secretary Defense as I was, and there's John Kerry as Secretary of State, and there's these other cabinet members, there are only two people who sit atop us, the President the Vice president.

Only two people outrank us. Carry can't make me do anything, and I can't make Carry do anything. Only the president can make us work together. Well, the president is a busy guy and he can't watch after everything. So inter agency work is inherently difficult for a president because he's got a knock together the heads of cabinet members who all have their own proud traditions and laws, and committees of Congress and all this stuff, and he's a and

he's a busy guy. So I thought there was a better way of doing counter terrorism inter agency out of the White House. But the President decided to create a department, and off he went to do it. But I did. I opposed that at the time. I also opposed the creation of a Director of National Intelligence for the same reason. Just created another guy on top of six. And if the problem is you've got a bunch of people who you can't get rid of any of them, you can't

put any of them on top of each other. Really, because law enforcement really is different from the military. Um, you've got to get them to work together. So the managerial question I always looked at it as a manager. The managerial question is cooperation, not consolidation. And so you, in your managerial mind, you say, how do I get different things that I cannot mush together? And it's not the right approach to push them together to work together.

That's a different managed social approach. Let me throw the question back at you, how do you get the head of the FBI, the head of the n s A, the head of the c i A, the head of the Apartment of Defense Intelligence groups. How do you get these disparate groups, all from very different institutions to co operate for a common purpose. There's a model, which is the National Security Council. It's been in effects since Eisenhower's days, as has worked better and worse than in different times.

But it's now got kind of well, I can't speak to right now, um, but uh, it did for a number of years and really very very efficiently in the first Bush administration work to get all of the people involved in foreign affairs, whether it's economic foreign affairs or military foreign affairs, are diplomatic foreign affairs working together every day and you know there are meetings at junior levels, their cabinet member meetings, and they try to work everything out.

And then only when they have met and tried does the president is his precious time used, because remember he's the only one who can tell everybody what to do. But there it needs to. The National Security councils be basically intended to put decisions in management form that are ready for the President to make a decision that the people at the table can't make because that would involve bossing one another around, which they can't do. That's a

that's a functional system. And when Tom Ridge came in as Homeland Security Director, he was setting up something that was a replica of that. I think if they'd stuck with it longer, what can you stick around a bit? I have a few more questions for you. We have been speaking with Ash Carter, former Secretary of Defense and author of a new book, Inside the Five Sided Box,

Lessons from a lifetime of leadership in the Pentagon. If you enjoy this conversation, well be sure and come back for the podcast Astras, where we keep the tape rolling and continue discussing all things defense related. You can find that at iTunes, Google podcast, Stitcher, Spotify, wherever finer podcasts are found. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Give us a review on Apple iTunes. You can check

out my weekly column on Bloomberg dot com. Follow me on Twitter at rit Halts. I'm Barry Hults. You're listening to Masters in Business on Bloomberg Radio. Welcome to the podcast, Ayesh, thank you so much for doing this. I don't spend a lot of time with the former defense secretaries, and I have a million questions. I am fascinated by the Department of Defense. And if I was born either ten years earlier or ten years later, I absolutely would have

joined the military. I was in that. I was in that zone at the tail end when I graduated high school. It was it was still however from v No. No, the draft was long over, UM, but there was still hangover from Vietnam, and it my father would have killed me if had I done that. UM. I always fancied myself a fighter pilot, which, as you described great is it's a UM. This is now manned aircraft is now going to be an antique. It's not like even even today,

you know you're fighting missiles. It's not a dog fight like it have mixed today, and that mixing will get even more and more unmanned over time. I think. I think that's right. There are a couple of questions I wanted to get to both about the book and some of the more interesting things some of the more shocking things within the book. I love the discussion about the Joint Strike Fighter, where you're negotiating was is this some north Rop Lockied Lockied Martin, not Northrop Grumman, which is

what I grew up with. UM. Next town over as a kid, um Grumman was in Bethpage and were building F fourteens there in the middle of negotiations. Uh, it's already you come in as Secretary of Defense, it's already way over budget, way delayed. And in negotiations, the representative from Lockheed asked, well, how many of these you know you're talking about budgets and what have you. How many of these planes can you afford? And your answer is how about none? And you get up and walk out

of the room. Tell us about that negotiation, and first of all, why was the Drke's Joint Strike fighter so far behind? How important was this as a piece of military hardware? And how was this resolved under your leadership? That was a tough moment. Uh. In that media room. That was a Saturday, and people knew if I called meetings on Saturday, it was because I was pissed. Fight Uh.

And I did have the CEO of this company, and I want to say I have as a successor and very good relations with lockeed Martin, and they do a lot of good work for us. But business is business us And what I was telling him was that if this management of this program doesn't improve it's going to go down the toilet. It's going down the reputational toilet. It's a joke in the media. What's the most bloated

thing government? Everybody can say, Joint Strike f you are, and there are toilet seats and people associated with well, and you can't ask for seven or billion dollars for the taxpayer for defense if you're running things like that. So I was the weapons buyer at that time, and I said, you know, I can't defend this kind of thing, and you're going to drag down the whole program with this kind of management. That's the point I was making to him. What did we do with the Joint strike

freighter to get it back on track? There are a number of things, but one thing I described in the book because it is kind of an executive guide to run the place, and contracting is critical. And what I did was shift the air early aircraft building contract. One of the steps I took to an incentive contract it rather rather than a contract where whatever he spent we gave him. That was the old old That was the

old method. And you can imagine where that I mean human nature being as you can see where that leads and that's okay. If you're doing an experimental, more developmental type thing, you don't really know where it's going to go. And it's unfair to make the guy give you a price. Once he's building aircraft and he's been doing it for a couple of years, couple of what he's up against, well, in this particular model, UH, for a couple of years.

And I and we I said, let's write a contract like this, will agree on a target price seems like and that you think and I think, is about what it will cost to build that plane. And we'll put a little profit in not a little profit, but a reasonable profit in there. For you, every dollar you overrun of that, I'm gonna make you pay fifty cents and the tax barrel bay fifty cents, except if it runs up to twenty cents on the dollar. After that you

have to pay for it all. On the other hand, if you if you deliver it cheaper then the target you get to keep fifty cents. I get fifty cents back. Yes, that puts the right economic incentives on the contractor. And with that and some other managerial moves, we made the costs of the joint stock strike fighters stopped rising and eventually turned over. And now we have a joint strike fighter, which I have to tell you that I said earlier in this conversation that I think it's the last man

fighter will ever build. But we do need it now because we need fighter aircraft and it's the aircraft of the future for our air Force, our Navy, and our Marine corps. So without it we would be in trouble. On top of which, there are a lot of foreign customers for it, and we sell it and it's actually good for our economy and for our defense industry. We

look at the old teens and fifteen. These are decades old planes, right, yes, and they got improved, you know, gradually over time, and we sold many of them abroad and they were very useful in Iraq, in Afghanistan and so forth, and also in deterring more formidable enemies than than the enemies we found uh there, So we needed the joint Strike writer. But this is an example of how uh, whether it's aircraft carriers, fighter aircraft dogs for

I E. D s we talk about a services. Do you know that half of the contract spend of the Department of Defense is not for aircraft and satellites. Not for things. It's for services, mowing the lawn at a base, doing high tech R and D, all these things, and you have to you have to learn how to be

a good buyer. They're also so uh as the person who ran the acquisition corps, I needed to train them to be excellent an acquisition and then I had to back them up because when companies trying to push them around, or not companies, it was it was always the what the lobbyists of the companies tried to push them around, or members of Congress of their staffs tried to push them around. You need to stick up for them if

they're doing the right thing. And when you do that, that makes everybody in the acquisition corps performed to their highest potential. And it was real important to me to set that example that the boss backs you up when you do the right thing. And anywhere in the penning on and I would say anywhere in leadership, in any department. You have to set expectations, but then when people meet those expectations and they run into trouble, you need to

back them up. That means if you've asked them to do risky stuff and something fails and it doesn't work out, you say, fine, you took a risk, and I told you to take the risk. It's too often we let people take risk in public life and then if it doesn't work out, well, we we throw them under the bus. Caught him loose. Yeah, well that's fine. It works once and then nobody else wants after that. You don't get

anything out of them. So you mentioned high tech. Um my view of and I think a lot of people's view of the rise of technology in the American economy, much of that traces back to DARPA and NASA, and whether we're talking semiconductors or software or geosynchronous satellites and GPS, all these things traced back to what we did in the fifties, sixties, seventies. Are we still engaging in that sort of deep research? I know, DARPA still exists, they

still run all sorts of interesting contest. Self driving cars is another example. Are we as cutting edge in the technology world in defense as we once were? And if not, what should we be doing that? Well, there are two sides to it. We're still a big dog verry. We spend more on R and D than Apple, Microsoft and Google combined. So We still do a lot, including a

lot of frontier stuff. But let's be realistic. When I started my career, everything of consequence in the world of technology, and you name things g I remember the birth of GPS um by the way, the Defense Department, the Air Force supposed, oh no, we didn't want to do it, and had to be overturned by the civilian leadership. And that it was President Reagan who all by himself decided that everybody should be able to use GPS. But still it wasn't as granular and detailed as the military grade

GPS at least. Yeah, that's true, that's true. But but the general point is that everything that mattered and that happened of consequence came out of government, came out of the United States, mostly came out of the military within the United States. That was then. Now it's a much bigger mix. A lot of the technology of consequence to the future comes out of the commercial world, and the commercial world is inherently global. What does that mean for

us as the Defense Department? Managerially, it's a very different thing. You have to do not only the management within your own house if you're an R and D, but I had to build I called him bridges to the tech world, so that we could stay connected with them and draw the best of what they were doing into us, rather

than having the flow only be the other direction. And now, how do you do that when you have Edward Snowden and you have a generation of technologists that is kind of suspicious of government or thinks government is inferior, and they're sort of uh or I had to try to restore that relationship of trust, which was the one that launched my career, that went back to the Manhattan Project.

But all that would all that had been gone, and and Jim Comey, who was my colleague in the FBI, was picking fights with Tim Cook, who was the CEO of Apple, and I'm in the middle of all of this. And I tried, and I think I had some success in drawing the tech community, but you had to kind

of meet him fifty fifties. So, for example, I'd try to get people to come in and serve in what I called the Defense Digital Service, which is it was a a way that you could a tech person could come in and just work for one year or on one project, and I enough to join the military. They'd have to join the civil service, and they just they could commit, and I'd go and I'd try to recruit them, and they'd have orange hair in their noses, and I'd say,

I'm not gonna ask you to do anything different. You can wear your hoodie coming to the Pentagon. And I promise you when you do that, first of all, your respect for the Pentagon will be very strong. And second, this will be what you'll tell your children about. You'll be proudest of this, prouder of this than working somewhere where you're selling advertising or whatever, as interesting as that

may maybe. And they would come and I wouldn't make them change clothes, and they'd be walking around the halls along with all of our people who are buttoned down and a suit like me, or wearing a uniform um and they and it was true. By the time they left, they tell me, this is the most meaningful thing I've ever done. And I'm so proud of it. I'm so proud of the people that I was with and could

be part of, could be part of. But if you didn't build that bridge at the beginning, and you didn't say, look, we're gonna have to agree to disagree about Edward student, you may think he's a hero. I think he's a trader. But let's agree to disagree about that. But I want

you to come in and give us a try. And then they would come in, they'd give it a try, successful, and they'd go back out to Silicon Valley or out to Boston or down to Austin, back to the tech hubs, and they'd take the word that the government ain't so bad after after all, and it does need our help, and it deserves our help. So that's interesting you you mentioned earlier um I ran in North Korea. Let's talk about two other countries you mentioned in the book, uh

inside the Five Sided Box. Let's talk about China and Russia. China seems to be very good at hacking corporate computer systems and taking pretty much what they want, including military manufacturers, and capturing plans for jets and drones and everything else. How dangerous a adversary is China, Well there, I think they're quite dangerous, and I have thought that for quite

some time. I came earlier than most people to the view, even even though I worked with the Chinese quite closely in the nineties, and after two thousand, knew everybody in the p l A had good relations with with them. It was clear to me that China wasn't going to turn out the way everybody had hoped in the nineteen nineties. Yes, that would be different. They'd be Chinese, but they wouldn't challenge the world order. They wouldn't become an economic competitor.

I mean, they wouldn't become a military competitor, and they would be become an economic power, but kind of one like US, a free trade type economic uh, and be like Canada and Mexico and Europe, and that kind of it was well in the nine nineties, you may have

still held onto that hope. I thought by two thousand, when my conversations, as I watched johnsa Men become Hujent Tao become Season Pining, and I've known all three of them, it became clearer and clearer that they were going down under a path quite deliberately, of state is um rather than free trade and capitalism, repression rather than an open society, and um one that was going to use every advantage a dictatorship could have to advantage themselves, including the one

you started with, which is using their spy agencies to steal information. The Chinese had copied us for a long time, or we used to be flattered by that um and and then at a certain point they get good enough at copying you that it stops being flattering and becomes threatening to you. And we we passed that point quite some time ago. So let me ask a question here. I still look at China as more of an economic threat than a and and more of a potential military threat.

At what point does that balance shift? At what point do they become a legitimate military threat at with aims of global domination versus letting their economy, which is quite an industrial engine, drive the development of the count I think they're convinced and determined to be militarily superior, but that's not going to happen for a long time. We have comprehensive military power that is going to be to

take a long time for the Chinese to overcome. And think about this, We spend a lot more every year than they do for starters multiple Secondly, yes, Secondly, we have been doing that for decades, which means we have this accumulated capital stock that is much larger than their's. Third, we have an experienced military. Our people have basically been at war for the last fifteen years. Our officer courts extremely proficient. And last we have all the friends and

allies and they have none. Basically they've been buying friends with that belt and road approach. You know, I'm not I think the Belton Road, like them, overtaking us militarily is exaggerated. Also, it's what yeah Belton Road. Remember this is the country that builds cities with no people in them, and so they're perfectly capable of having initiatives with nothing going on underneath. What they did with Belton Road was

gathered together a lot of stuff they were doing. Anyway, most of the countries that they they Belton Road with South America. Yeah, well, go to Africa and ask how that which where the Chinese came first? And the Chinese have worn't out there. It takes about three years and

they were out there welcome. Yes, because that's when people realize that it's all about China and they're not grants their loans, their loans on predatory terms, and the Chinese bringing all their own workers and then start taking your precious metals out of your country. They bring in their own work. And that's the Belton Road. So it's sours on people real fast because it's so explode a native,

you know. And that's where China and we, I think, really differ in fundamentally, and that is this if our at our best and usually and certainly our institutions go back to the Enlightenment, and it was about the rights of man and the dignity of man. Today we'd say, people, um, for China, it's all about being Chinese. So our ideology, Yes, we're American and we stick up for Americans, and maybe we're narrow minded sometime, but at the heart, our political

values are universal. At their heart, Chinese political values are about being China. Pretty soon that dawns on everybody around them. Remember also that China is only half of Asia. So I want to have a China policy, but always telling people we don't have a China policy, we have an Asia policy, and I want to win the other half. I want to trade with it. I wanted to be friendly with me. I it to work with me militarily, and that is both a good in itself and the

hedge against China. So we we can't lose those. We really had to keep our focus and the Secretary Defense I spent a lot of time meeting with my counterparts from Vietnam, from Laos, from Cambodia, Indonesia, Malaysia, as well as the traditional friends like Japan and it's Korean, Australian, so forth, to make sure that we had friends there and that the Chinese saw that we had friends. So let's talk about one other country in Asia, which is Russia.

Not economically the powerhouse that China is, but they seem to be very good at sowing descent and sowing disinformation. Their brand of um warfare or pre warfare is kind of unique, their involvement in various uh, when you're in open society, you have to acknowledge that they're going to attempt to disrupt our elections and everything else. How does the former secretary of Defense look at the former Soviet

Union that's now Russia. Well, when your trend lines are all down like Russia's and rather than up like China's, you only have one tool, and that is to be a spoiler. And the Russians have perfected being a spoiler. So they have NATO, which has unity, and so they try to to so discord. They had the United States, which is doing fine and powerful and won the Cold War and they resent and so their way of trying to get back at US is to try to so

discord within the United States. That's all they have. And when dealing with Putin over the years, by the way I first met Vladimir Putin, he was a note taker meetings between Clinton and Yelson. He sat in the back, this guy, and we knew who he was, c Ia

knew he was. He's back there taking his and my view of him has been if it were only that we disagreed about Syria and van and NATO expansion and so forth, those are normal geopolitical issues, and there with a foreign leader, you go in and you agree where you can, and you agree to disagree where you can't, and you go on. The problem with him is as you work down the list, you find he has an item on his list that you can't build a bridge to, and that's screwing us, and that's on his to do list.

It's very hard to negotiate on and say, well, let's talk about screwing us and maybe we can meet halfway. I'm not I'm not going to do that. I expect we're going to find out that Russia was much more involved in Brexit than anybody previously imagined. Yeah, that's actually a new documentary out called A Great Hack Netflix documentary which describes exactly that. Very deeply involved in trying so

that now. Of course for them, it was there. They're they're uh, throwing spaghetti at the wall and seeing right stick there. They're fomenting all kinds of discord, and every once in a while one of these goes, one of these long shots goes the distance and doesn't just stir up a cloud of dust. But there's a cowboy at the end of it. And in the case of Brexit, they scored um. But I don't think going into it that they knew they were going to win that one.

They were, uh, that's what week countries do. And and Russia basically has nuclear weapons and being a spoiler, and that's all it's got. I have a million questions for you, but I know I only have you for a short period of time. Let me ask you some of my favorite questions I ask all my guests sort of our speed rounds, and then we'll get you over to television and have you continue the conversation. What was the first car you ever owned? Year making model? It was a

nineteen sixty eight empower. And the reason and I know intimately about that car was I worked for five years at gas station on North broad Street in Philadelphia. Was my second job. The first job was at a car wash, and I got fired from it. Uh, and then I walked up the street and got a job at a Gulf station there and and therefore I could take that car apart and put it back together again, something I could never do with a car today. Well, it's all

chips and computers. It's you have to replace. You just replace, uh, chunks of it. You know, there are no turning and ranches and stuff. Tell us about your early mentors who influenced your career, whether it was academically an m I. T. And Harvard or UM professionally in the Pentagon two years.

The people who got me from being a physicist to being a public servant were those guys from the UM generation of the Manhattan Project that I referred to earlier, who believed that they had UM done something of consequence, namely the nuclear weapon. But with no college came responsibility. Then later in my in the time where I slowly kind of worked my way up from junior ranks in

the Defense Establishment to becoming the Secretary of Defense. Um, there were people uh like Jim Slessinger, was Richard Nixon, same great great guy, Brent Scotcroft, national security advisor and four star general previous yes three start Actually okay, he deserved one. Um Bill Perry, who was Secretary of Defense, Admiral Inn. This is a guy who There was a Perry long ago who was a no. This is a guy who was a scientist like it turns out, but

not all three of those were um Bob Gates. These were people who were uh capable, and they always stuck up, stuck up for a junior person. And I got myself into a few tight jams where I thought I was doing the right thing. One of them was with respect to President Reagan star Wars, which I I said wasn't

going to work, was my technical judgment. Well, that flew in the face of a president's desire, and I learned what it was like to tell the truth in the real world, where presidents don't like when you trap all over there initiatives. But those people that I just named stuck up for me at that time and therefore stuck up for the truth, and that made me feel that there was dignity and honor as well as purpose in public life. And I tried to carry that forward with me.

And I don't think I would have stuck with it if I hadn't been able to look up at my at people who it turns out, became my predecessors and Secretary of Defense and say that is not only a capable and patriotic person, but an admirable and honorable person. Quite quite interesting. Let's let's talk ab out some of your favorite books. What do you enjoy reading. You're a bit of a it's funny berry. I am uh, and I'm all nonfiction because I love to learn about something

I've never seen, never done, never will do. That's why I wrote the book I did about the Pentagon, because if you've never been in the Pentagon and you want to know how all the parts were, it paints quite a vivid picture. It's an executive guide or a citizens guide to the Pentagon. Side about me, it's about the the Pentagon. I like reading books like that. That's why I wrote a book like that. I read, and this

may surprise you, textbooks. Okay, it may sound boring, but here's why a text if you want to learn something. A textbook is about is designed. It's written to teach you. So from a good textbook you can learn a lot about a subject you don't know. And um, second, if you don't like if if something doesn't come through to you in the first textbook, get another textbook. I always

get three or four the same. I like mathematics, I like physics, but about like history and language and so forth too, because then you can say, well, I'm gonna this. I didn't get this guy's explanation of a certain subject, so I'll go to the corresponding chapter and the other one and read that, and they've got a better explanation, and you go back and forth. I like doing that. And it may sound like an odd recommendation to people,

but if you like to learn, try textbooks. Okay, there's there's two books I have to ask you about on the off chance you might have read them based on our previous discussion. One is a book on the history of the medieval era with the title A World Lit Only by Fire. I have I had not read it, but I've I've read. I guess it's kind of fascinating because that thousand year period is shocking for the lack of technological advancement. Before and after Tons it was it

was dark and every it wasn't cold, truly dark. But if you look at human material progress, not allow for the wet. For Western culture, there was a thousand years when say, Islam was going great and yes, and they were doing mathematics, and they were doing all sorts of things with trade and pottery and glass, and we were

doing nothing. Ever in the Western world. The the other book that you immediately made me think of when you were describing how people often don't appreciate and understand what the government is doing is the most recent Michael Lewis book called The Fifth Risk, which is about all these scientists and all these managers that are doing the government's work that is effectively essential and most of us are

oblivious to it. Well, that's in a sense the theme of that book is the theme of my life of getting into national defense as a technologist, and there are lots of other skills as well. I'm a strong believer that um uh, the best government is one that people come into and go out of. Now we're criticized for that, for the reving for the yeah, and every administration, things change And here's how it looks to me about political

appointees and government. About half of them are really good. Uh, a quarter of them have no idea what they're doing at first, but they learn fast and they're patriotic and they do well. And a quarter of them are hopeless and never get any better. That's pretty much the way it is. But they bring in a freshness every time they come that I think is healthy for our government. And so compared to the British, who are horrified, for example, to see all their counterparts chart change every time for

presidential administration change, it's pretty helpful. But in a time, particularly in the military, where we're very we're never going to return to the draft. We will continue to get people to register for the draft because it's a little reminder that they owe something to their country. But I don't want there are four million kids who turn eighteen every year. I don't need four million. I need a

quarter of a million. And moreover, many of them are not physically or mentally fit to be in our military today, so there'll never be a citizen army. So there needs to be some way of linking the people and government, and one way is for those who have something to contribute to to to UM, find some way of being supportive UH. And there are lots of ways of of doing that. So I I think that's important for citizens that don't don't believe yourself made. Even if you're a

successful person, none of us is self made. Tell us about a time you failed and what you learned from the experience. UM. I early early on in my UH time in to speak the big leagues, the number three, number two, number one, UH, I had to work very hard at dealing with the press and the Congress and just getting good at that. UM. And first of all, you have to start from the right place that I did,

which is you can't start from a position of disdain. UH. Congress for example, you know, most of these guys are working so hard. There's so they're they are trying to understand a much wider range of issues than even the Secretary of Defense. They have to vote on all these other issues. And so you have to start with a attitude that they're very they're that they're very stretched, and they're they're trying. UM. But what I had to do, Barry,

and I described this in the book is practice. I would sit down before a hearing, or before I went out and made an announcement or did a press conference, I would got in practice and I at my staff and I'd get Joe Doneford. It was a chairman with me, so he could learn to in the same roy and I'd say, asked me all the hard questions, asked me the things that I might not have thought of. UM,

because when you're when you're going real fast. And I was going real fast, because there's a lot I wanted to do and I had two years as the top guy, UM, and I had had all those years to think about what I would like to see see Donna. I was going fast, UM, and I wanted them to catch the soft spots in my arguments. And the place was where I was skipping over over things. So I wasn't too

proud to practice. But Chuck Hagel, who came before me, who was a very very great guy, he didn't practice for his confirmation hearing, and that was a rough confinmations of very rough confirmation. And I asked him to practice. I said, I wasn't too proud to practice, and he said, I've been a member of the Senate for a long time. I know how to handle it. I think in retrospect he would have done well, done a little bit better

if he had he had practiced um. But that was something I wasn't good at, and I describe in the book holl if you're that kind of person, or you think you might be, don't be too proud. Um. What are you most optimistic about the penticon and the military procumin process going forward? And what are you most pessimistic about about his procurement process? I think that if the it continues, the kind have good management at the top, and I can't speak for that, of course I tried

to set that example, but I don't know. Um Uh. I think we can continue to be the finest fighting force the world has overknown technologically as well as in the kind of people we attract, and generally speaking, I'm optimistic about that for our military overall, it's a learning organization.

It's very constructive organization. It's been at the top technologically in terms of human talent, and if it continues to draw from the civilian world the very best trade craft from them about how to be good and how to compete and how to be the best, I think I'm I'm confident we can be the best. I also think that it's a great molder of of citizens. Our veterans are wonderful people. They're they're morally correct, they know how

to behave themselves and conduct themselves. Uh, They're disciplined and determined, and they understand that we all live here and uh that the government is one of the ways, but not the only way, that we keep our society and civilization going. They have that imbued in them. They know that they're not self made, that they're part of a wider society,

all those good values. So I'm pretty optimistic. And our final question, what do you know about the world of politics and diplomacy and the Pentagon today that you wish you knew when you were getting started. I didn't always.

I think I took a lot for granted in the course of my life when I talked about the gym Slassingers and the Prince car across from the Bill Perry's and the pop Games, and I'm being I could always look northward right up to the President and there was uh a good order and discipline for the most part in the government. And these were admirable people. They made mistakes there for sure, and I didn't agree with everything

they did. But starting with President Reagan and the first president I worked under, I could look up and I say, the President United States is is someone whom I can work for and kind of emulate what he stands for. There's a part of our country and it's not just the president, but it's that um Ah. I I now understand how lucky I was to have those people above me, and maybe I took that for granted. I mean, I'm a believer in what we've been doing in the world

all these decades. I now realized that you you really have to keep proving that to the public and make them understand that this is a necessity and you can't take anything for granted. So I I would take a lot less for granted now than I thought I could when I started my career. But I had around me people like those um and you tend to do that

quite quite fascinating. We have been speaking with Ash Carter, former Secretary of Defense and author of a new book, Inside the Five Sided Box, Lessons from a Lifetime of Leadership in the Pentagon. If you enjoy this conversation, we'll be sure to look up an intro down an Inch on Apple iTunes, and you can see any of the previous three hundred or so such conversations we've had over the past five years. We love your comments, feedback and suggestions.

Write to us at m IB podcast at Bloomberg dot net. Please give us a review on Apple iTunes. I would be remiss if I did not thank the crack staff that helps put these conversations together each week. Michael Boyle is my producer. Carolin O'Brien is my audio engineer ATKA. Val Bern is my project manager. Michael Batnick is my head of research. I'm Barry Retults. You're listening to Masters in Business on Bloomberg Radio.