I, As a Yale Conservative, Object — And Also Endorse Mandatory Union Representation On Defense Contractor Boards
BYLINE: Tuck Chimes
I want to ask you something. Sit with it. Who does the American military work for?
Does it work for the men and women in uniform? Does it work for the republic — the constitutional, Madisonian, flag-on-the-front-porch republic that I, as a conservative from Yale University who has spent thirty years on the political economy of national power, have dedicated my professional life to defending? Or does it work — and I ask this with genuine incredulity — for a carried-interest tax shelter in Midtown Manhattan staffed by thirty-four-year-olds whose closest encounter with a weapons depot is a PowerPoint deck titled "Platform Consolidation: Year Two" with a progress bar stuck at 72%?
Forbes asked last week whether the Pentagon is for sale to private equity. I will answer that question, and the answer is: it is not for sale. It has been sold. The transaction closed while we were all arguing about something else. And I, the conservative from Yale University, am here to sound the klaxon.
Let me be precise about what has happened, because precision is the courtesy I owe you as a reader and the discipline I acquired at Yale, where I first encountered Scoop Jackson in a seminar I remember with unusual clarity — the great Democratic senator from Washington who understood, in a way that has been entirely lost on both parties, that a strong defense is not a budget line. It is a covenant. Jackson's hawks believed that the sinews of national power were forged in union halls and manufacturing towns, that the man on the assembly line building the jet engine was as essential to the republic as the general who flew it. I am in that tradition. I have always been in that tradition. Yale confirmed it.
Private equity is not in that tradition. Private equity is, by design and by fiduciary mandate, in the tradition of extracting the maximum possible return from a host organism before the organism notices it has been hollowed out. The 2-and-20 fee structure — two percent of assets under management annually, twenty percent of profits — is not a partnership with the American defense industrial base. It is a toll booth erected across the throat of our national security, and every time a PE-backed rollup "right-sizes" a base-services contractor, every time a maintenance schedule gets stretched to hit an EBITDA target that someone named Chad modeled in Excel at eleven-thirty on a Tuesday, every time a unionized workforce gets replaced by a subcontracted workforce because the labor arbitrage looks favorable in a model, what is actually happening is that the readiness of the United States military is being quietly, spreadsheet-by-spreadsheet, liquidated.
I am not speculating. The Government Accountability Office has documented, repeatedly, material readiness failures tied to base-operations and logistics contracts. Aircraft that cannot fly because the maintenance contractor missed a parts order. Dining facilities on forward operating bases run on skeleton staffs because the PE-owned parent company is saving for a dividend recapitalization. This is not radical left-wing analysis. This is a reading of the public record, which I encourage you to undertake, as I undertook it — having been trained in the close reading of primary sources at Yale University, where I graduated with distinction, a fact I mention purely for context.
What is to be done? I will tell you what is to be done. I have a three-part proposal, and I am going to call it, without apology or irony, the Eisenhower position, properly understood.
Eisenhower warned us about the military-industrial complex. What he feared was not the existence of a defense industry. What he feared was its capture — by money, by influence, by the revolving door between the Pentagon and the boardroom. That fear has been vindicated so completely that it requires a new vocabulary. The complex Eisenhower warned about was at least run by generals who believed in something. The complex we have now is run by portfolio managers who believe in the IRR — and, if pressed, the carry.
So. The Eisenhower position, properly understood, requires three things.
First: co-determination. Every company holding a Department of Defense prime contract above a threshold — I would set it at five hundred million dollars — must seat worker representatives on its board of directors, comprising no fewer than one-third of board seats. This is the German model. The Germans, who make engines and precision instruments that work, require it. I am a conservative who believes in things that work. The workers who actually build the weapons systems, who maintain the aircraft, who run the mess halls at Bagram and Ramstein, have an interest in the quality of their work that no private equity fund manager in Manhattan shares. Put them in the room. This is not socialism. This is accountability. This is what my grandfather — who did not attend Yale but was nonetheless a wise man — would have recognized as a fair shake, which is, properly understood, the foundational conservative value.
Second: a federal cap on dividend recapitalizations at any firm holding a DoD contract. You do not get to load a defense contractor with debt in order to pay yourself a distribution and then tell Congress the contract needs to be renegotiated because margins are tight. You simply do not get to do this. The republic is not your leveraged buyout. A Yale education is not required to understand this, though it helps. A hard statutory cap — no dividend recap within five years of initial acquisition, full stop — would end the most pernicious financial engineering in the sector overnight.
Third: the Cincinnatus Clause. Lucius Quinctius Cincinnatus, whom I encountered as a concept at Yale before I fully appreciated him as a model, was the Roman general who returned to his farm after saving the republic. He did not take a board seat. He did not monetize his service. He did not launch a defense-focused SPAC. I propose a ten-year bar — ten years — on any former senior DoD official joining the board of any private equity firm with a defense portfolio. The revolving door is not a feature of the free market. It is a corruption of it. Close it.
Forbes asked whether the Pentagon is for sale. I am telling you it has already changed hands. The question now is whether we, as conservatives — as people who believe in the sovereignty of this republic, the sanctity of its military covenant, and the dignity of the men and women who execute both — are willing to act like it.
I am. The conservative from Yale University is very much willing to act like it.
The Eisenhower position awaits. I am, as I have always been, available.
Tuck Chimes is IRREVERENT's Business & Economics Correspondent. He lives in Georgetown with his wife June and two Alaskan huskies, Marmaduke and Tonto.