The Stunning Evolution of Millennials: They’ve Become the Ben Franklin Generation

: Political Columnist, CEO of Hanft Projects

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Wealthfront – an online financial services start-up targeted squarely and unashamedly at Millennial wallets – raised $64 million last month. That’s on top of $35 million that venture firms plowed into the company earlier this year.

Every sweeping cliché about Millennials – that they are addicted to the itch and twitch of immediate gratification, that they are not interested in participating in the casino stock market – is being sent to the generalization graveyard. Not just because of the success of Wealthfront – who has crossed $1 billion in assets under management – but also the growth of Betterment, LoanVest and others who have a hungering eye on the $7 trillion in liquid assets that Millennials will have in their generational clutches within the next five years.

What’s particularly revelatory about the success of Wealthfront – they reached one billion in two-and half years, while it took Chuck Schwab six years to get there – is its canny use of technology and whizzy algorithms, the deities of the Millennial, in the service of a rather boring, long-term, Ben Frankliny investment conservatism. This is more often associated with people who need hip replacements than hipsters.

Wealthfront works by first asking a few basic questions – age, income, liquid assets, risk tolerance. It’s the bromidic stuff of financial planning for decades. Then it provides a financial plan consisting of ETFs – most of them from Vanguard – that track underlying indices in a variety of asset classes, trades based on what the algorithm instructs. The boil down their practice to: personalize, diversify, re-balance.

It’s not surprising that Millennials are willing to put their financial faith in the crunch of algorithmic investing (or as its called, robo-investing from robo-advisors. After all, this is a generation of digital natives and semi-natives who trust code jockeys to find the cheapest plane ticket, recommended the best oxtail pizza, and soon, to provide driverless cars. They will also be the early adopters of Apple Pay and other new transaction modes.

Their faith in technology is understandable. Algorithms don’t act in their own self-interest. Algorithms weren’t responsible for dreaming up sub-prime loans and nearly bringing down the financial system. Millennials didn’t trust authority and conventional sources of wisdom before the melt-down. Imagine now. Wealthpoint argues that Millennials: “…have been nickel-and-dimed through a wide variety of services, and they value simple, transparent, low-cost services.

The Pew Study “Millennials in Adulthood” confirms the Wealthfront thesis finding that “… just 19% of Millennials say most people can be trusted, compared with 31% of Gen Xers, 37% of Silents and 40% of Boomers.” If you can’t trust people in general – which was the question – what hope is there for the conniving financial advisor?

The technology lure of Wealthfront is unsurprising, but what is remarkable is that Millennials are so drawn to the core Wealthfront investment thesis, which argues against individual stock picking, and balances a personalized mix of actively managed ETFs instead. As they put it, “…our service is premised on the consistent and overwhelming research that proves index funds significantly outperform an actively managed portfolio.”

I love that a generation who’s identified with the eroticism of immediacy is choosing slow and steady as an investment theme. It makes them, truly, the Ben Franklin generation, in even more ways than just how they relate to money; they value craft, authenticity, strong values. Ironically, they are far more prudent and sensible than their predecessors. After all, both Boomers and, yes, the Greatest Generation fell victim to get-rich-quick bubbles, blandishments, and stock-picking mania. Not many people reading this remember or know that the stock market euphoria of the sixties was monikerized as “the Go-Go Years.”

Millennial attitudes are understandable, to say the least; they are struggling under the crippling weight of student loans, they’ve seen their parents and often grandparents suffer the pain of the financial crisis, so to the extent they want to enter the stock market at all, they want to do it with commanding caution. As one commentator, noted, they “share experiences that color how they look at their finances and the financial industry”

Yet despite their personal debt and experiential context, Millennials are surprising long-term optimists, which explains their willingness to park their money in tracking ETFs. On this subject, Pew notes: ” Millennials are the nation’s most stubborn economic optimists. More than eight-in-ten say they either currently have enough money to lead the lives they want (32%) or expect to in the future (53%).”

Needless to say, skeptics are in full swarm mode, most from the traditional advisory world. They argue that nothing can replace a human being – supported by the right technology tools. And that Wealthfront’s business model – a monumentally minimal .25 percent (on assets over $10,000) – does not a business make. I’m confident, though, that the folks at Spark, who led the $65MM round, can do basic Common Core multiplication.

It will, in fact, be possible for Wealthfront to move up to more expensive, value-added services if it so chooses, because they are proceeding from a place of generational trust. It will be harder for traditional financial institutions to come down and meet them from the top of the mountain.

An America led by the Ben Franklin generation is likely to be a more stable, patient, values-driven and realistic place than the one led by the boomers. It’s a place where technology is expected to solve problems, simplify life, and strip inauthenticity out of the sales process. They don’t want to beat the system; the success of Wealthfront and others says that the Ben Franklins want a fair system they can be part of, and that can benefit everyone in it.

For traditional financial institutions – who for decades have sold themselves on outperforming the system – this is decidedly not good news. The regulatory language “Past performance is no guarantee of future results” was created because banks, mutual fund companies, and others would manipulatively scream “Up 75 percent” and investors would see that as a go-forward promise.

I’m not saying that Wealthfront or Betterment will become tomorrow’s JP Mogan Chase or Fidelity. The market is dynamic; already Schwab is getting into their space, and others will follow. But the impact of the Millennials on the fundamental sales structure, value equation and content (in its broadest form) delivery of financial services is yet to be written. There is no doubt of that.

While it is true that most financial behemoths make their big money from the corporate side, I think even that world – which is very much driven by advisory services and complex financial products – is vulnerable to the upside-down view of the Ben Franklin generation. Even so, the quirky but intellectually consistent confluence of Ben Franklin values and Larry Page technology will come to disrupt the embedded architecture of corporate finance. Not all of it can be dismantled, but I can see opportunities for disruption in areas like debt syndication.

So when the SEC finally gets its act together on the JOBS Act, and promulgates the details of equity crowd-funding for non-qualified investors, that will be just the beginning of what I think will be an inevitable cascade of change. Things happen slowly till they happen fast. It was back in 1998, believe it or not, when Spring Street Brewing was brought public by Wit Capital in the first Internet IPO. The giants of financial service haven’t seen the telluric shifts that travel, media, entertainment and home thermostats have. They will. Depending on who you are, the Ben Franklin generation is composed of 80 million Benedict Arnolds.

I have not, or do not, consulted for any of the companies referenced in this piece, and have no equity position in them.

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New Russian Boldness Revives a Cold War Tradition: Testing the Other Side by DAVID E. SANGER · · October 30, 2014

WASHINGTON — When the White House discovered in recent weeks that its unclassified computer systems had been breached, intelligence officials examined the digital evidence and focused on a prime suspect: Russia, which they believe is using its highly sophisticated cyber capabilities to test American defenses. But its tracks were well covered, and officials say they may never know for sure.

They have no doubt, however, about what happened this week on the edges of NATO territory in Europe. More than two dozen Russian aircraft, including four Tu-95 strategic bombers, flew through the Baltic and Black Seas, along the coast of Norway and all the way to Portugal, staying over international waters but prompting NATO forces to send up intercepting aircraft.

Taken together, they represent the old and the updated techniques of Cold War signal-sending. In the Soviet era, both sides probed each other’s defenses, hoping to learn something from the reaction those tests of will created. In 2014, cyber is the new weapon, one that can be used with less restraint, and because its creators believe they cannot be traced and can create a bit of havoc without prompting a response.

In this case, the response was that the White House shut down use of some of its networks for lengthy periods — more an inconvenience than anything else, but a sign of the fragility of the system to sophisticated attacks.

But in both, divining the motive of the probes and the advantage, if any, they created is far from easy.

The Russian aircraft exercises were part of a broader escalation: NATO has conducted more than 100 intercepts of Russian aircraft this year, its officials report, far more than last year, before Russia annexed Crimea and began its operations in Ukraine.

“This is message-sending by Putin, and it’s dangerous,” one senior defense official said Wednesday, noting that in many cases, the Russian aircraft had turned off their transponders and did not reply to radio calls to identify themselves. In response, Germany, Portugal, Turkey and Denmark sent aircraft aloft, along with two non-NATO nations, Finland and Sweden. They were particularly struck by the use of the Tu-95 bombers, which Russia usually keeps clear of Europe.

But what’s new is the sophistication of Russia’s cyberespionage campaigns, which differ somewhat from China’s. The Chinese attacks — like those led by Unit 61398 of the People’s Liberation Army, whose members were indicted earlier this year by the Justice Department — are aimed chiefly at intellectual property theft. The Russians do a bit of that, too, but the attacks also suggest more disruptive motives.

Last year, security researchers at several American cybersecurity companies uncovered a Russian cyberespionage campaign, in which Russian hackers were systematically hacking more than one thousand Western oil and gas computers, and energy investment firms. The first motive, given Moscow’s dependence on its oil and gas industry, was likely industrial espionage. But the manner in which hackers were choosing their targets also seemed intended to seize control of industrial control systems remotely, in much the same way the United States and Israel were able to take control of the Iranian nuclear facility at Natanz when it attacked its computer systems with malware through the summer of 2010, disabling a fifth of Iran’s centrifuges at the time.

In the case of the attack on the White House’s unclassified computer system, officials say no data was destroyed. “The activity of concern is not being used to enable a destructive attack,” Bernadette Meehan, the spokeswoman for the National Security Council, said Thursday. She would not say which country or hacking group was suspected of being behind the attack.

But there is evidence that the internal alarms at the White House were not set off — a sign of the sophistication of the attack. Instead, the United States was alerted by a “friendly ally,” one official said. That suggests the ally saw the results of the attack on a foreign network, perhaps picking up evidence of what data had been lifted.

Armond Caglar, a cybersecurity expert for TSC Advantage, a consultancy in Washington that focuses on these kinds of attacks, said the motive could be “to test what the security culture is, or to get valuable information about the security posture at the White House.”

But that posture is quite different for classified systems. He also said it could be to “prepare for more graduated attacks” against better protected networks, including SIPRnet, the classified system Chelsea Manning, formerly known as Bradley Manning, entered to turn over hundreds of thousands of documents to WikiLeaks in 2010.

Russian hackers — those working for the government and those engaged in “patriotic hacking” — are considered particularly stealthy. In several cases, security researchers have found evidence that hackers were probing the very core of victims’ machines, the part of the computer known as the BIOS, or basic input output system. Unlike software, which can be patched or updated, once the BIOS of a machine is infected with malware, it often renders the machine unusable.

Researchers have also found that the hackers were remarkably adept at covering their tracks, using encryption to cover their tools, but their digital crumbs left no doubt that they were Russian. Their tools were built and maintained during Moscow working hours, and snippets of Russian were found in the code. Though researchers were unable to tie the attacks directly to the state, they concluded that Russian government backing was likely, given their sophistication and resources.

Since researchers uncovered the campaign last year, they say the attacks have become more aggressive and sophisticated.

Early last month, security researchers uncovered a separate Russian cyberespionage campaign that used a zero-day vulnerability — a software bug that had never been reported in Microsoft’s Windows operating system — to launch cyberattacks on a long list of Russian adversaries. Among them: the North Atlantic Treaty Organization, European governments, the government of Ukraine, academics who focused on Ukraine, and visitors of the GlobSec conference, an annual national security gathering that took place last May in Slovakia and was largely dominated by the situation in Ukraine.

Then this week, researchers at FireEye, a Silicon Valley firm, released their work detailing a similar campaign by Russian hackers that also targeted NATO, and a long list of victims that included the governments of Georgia, Poland, Hungary, Mexico, Eastern European governments and militaries, and journalists writing on issues of importance to the Russian government.

“This is no smash-and-grab, financially motivated Russian cybercriminal,” said Laura Galante, the threat intelligence manager who oversaw the research at FireEye. “This is Russia using their network operations to achieve their key political goals.” · by DAVID E. SANGER · October 30, 2014

‘We’ve Got To Wake Up’: Frank Kendall Calls For Defense Innovation By Sydney J. Freedberg / View Original / August 6th, 2014

 DeM Banter:  This goes back to a very basic question… do we have an ecosystem that supports innovation? 

WASHINGTON: “We’ve been complacent,” Frank Kendall said. For decades, the Pentagon’s top weapons buyer said yesterday, the US has assumed its forces will be better equipped than any foe, but that’s increasingly in doubt: “Our technological superiority is very much at risk, there are people designing systems [specifically] to defeat us in a very thoughtful and strategic way, and we’ve got to wake up, frankly.”

“One of the things now hurting our force is we’ve gotten used to having nothing but very, very high-end weapons systems, ‘exquisite’ weapons systems,” elaborated one of Kendall’s aides, Alan Shaffer. “Unfortunately….potential adversaries have figured out how to counter [those] with things like very cheap electronic warfare systems,” said Shaffer, currently acting assistant secretary for research and engineering, speaking at the same defense industry conference that Kendall addressed. Those threats, Shaffer said, include “nations we don’t normally think of as technologically advanced such as Iran, which is fielding a very exquisite system of Global Positioning System jammers and integrated air defense systems.”

It takes innovation, both tactical and technological, to stay ahead of such savvy adversaries, and incentives for innovation will be a major part of the Pentagon’s next round of acquisition reforms, said Kendall. Better Buying Power 3.0 will be released in “two or three months,” he told reporters after his speech to industry group AFCEA. But Kendall made clear to the it would be a matter of incremental improvements to the existing system — “I am not a believer in silver bullets” — rather than radical change.

Yes, BBP 3.0 will continue the push to streamline bureaucracy, rely more on privately-funded research and development, and generally use more commercial business practices, but “the commercial model does not apply all the time,” Kendall warned. In theory, “we could just buy products that are already on the market, we could stop doing R&D,” he said. “A lot of our allies do this, [and] if you’re willing to be No. 2, 3, or 4, we could do that.” But if the US military wants to stay No. 1, then it can’t rely on the private sector to fund cutting-edge, military-specific R&D. No matter how much you reform, he said, such weapons programs will still take many years and taxpayer dollars.

So what can the Pentagon do to make a difference? One deceptively simple-looking measure Kendall mentioned is to write “best value” contracts that actually pay companies for exceeding performance targets, instead of awarding them to the lowest bidder who meets the minimum requirement.

That said, formal requirements aren’t holy writ. “We’ve got to start  breaking the tyranny of the requirements process,” said Shaffer. “Right now, if you look at many of the systems we’re fielding. they have this enormously long set of requirements, many of which may not matter a whole lot. We can do prototyping to build a capability, let operators play with it, then we can figure out what we really have to build.”

This “build it and they will come” approach is essentially how the Predator drone evolved from a demonstration project to a military icon. But Shaffer’s archetype of such “capability prototyping” is the famous Air Force and NASA “X-Planes,” from the Bell X-1, which broke the sound barrier in 1947, to the Boeing X-51, which broke the endurance record for hypersonic flight – six minutes at Mach 5.1 – in 2013. None of the X-designs was ever mass-produced for military service, nor were they meant to. They weren’t built to formal requirements, either. Instead, they provided not only valuable test data but, just as important, dramatic proof of what new technology could do, jumpstarting military imaginations to explore the possibilities.

Getting ideas from the X-plane stage into production will require closer cooperation between the Defense Department science and technology (S&T) community and the rest of the acquisition system, which will be a priority of Better Buying Power 3.0, said Shaffer. In one recent success, he said, the Long-Range Anti-Ship Missile (LRASM) leapt directly from a DARPA demonstration into a formal program of record for at least 100 missiles, with program inception in 2013 and fielding set for 2018, less than five years later. “That’s pretty good,” said Shaffer. “That happened because we did the prototyping early in S&T.”

Prototypes boost innovation best in the early stages of the program, “before you go to formal lockdown of requirements at Milestone B, before you got to Critical Design Review,” Shaffer emphasized. “Post Milestone B, it’s too hard for S&T to get wedged in, and we probably don’t want to” — that’s the point where the program must focus on schedule, budget, and getting new technologies to work reliably — [so] you want to delay Milestone B as long as you can to burn the risk down.”

That said, you can never eliminate risk without eliminating innovation as well. “If you’re going to do things for the first time, it’s probably going to take you longer than you thought and it’s probably going to be harder than you thought… and some of the things you try aren’t going to work,” Kendall said. “I think we have to accept that.”

Today, Kendall feels, “we’re not taking enough risk. That doesn’t mean we should take risk wildly or stupidly… have to manage it, you have to understand it, you have to deal with it… but if you don’t take risk, you’re not going to be the No. 1 military power in the world.”

Clapper: Terror threat is growing By Michael Hardy / View Original / July 24th, 2014

James Clapper: A ‘perfect storm’ is making the U.S more vulnerable to terrorists.Photo by: File

A “perfect storm” of factors has weakened the country’s ability to prevent and fight terrorism, according to Director of National Intelligence James Clapper.

Speaking at the National Press Club to mark the 10th anniversary of the 9/11 Commission’s report, Clapper noted that “the terrorist threat to the United States is still very, very real.”

The three factors contributing to the “perfect storm” are:

■ A loss of intelligence sources in the wake of unauthorized disclosures of information;

■ Policy choices limiting the collection of information, and;

■ Recent and expected future cuts to the budgets of intelligence agencies.

“The terrorist threat is not diminishing. It is spreading,” he said. “As a nation, in my opinion, we are accepting more risk than we were three years ago, or even one.”

See the full presentation at

How Will This War End? By Lt. Gen. James M. Dubik, U.S. Army retired / View Original / July 25th, 2014


The primary metric in war is attaining one’s strategic aims. In the post-9/11 war against al Qaeda and its affiliates, who is winning? Both the U.S. and al Qaeda have done a lot of killing, but attrition alone is not decisive. The U.S. is now on its third strategy in this war. This strategy seems as unlikely to attain America’s strategic aims as the previous two.

Al Qaeda attacked the U.S. on September 11, 2001, but it was not their first attack against us. The December 1992 bombing of two hotels in Yemen that had housed U.S. troops in transit to Somalia was the first. In February 1993, an al Qaeda-trained truck bomber attempted to bring down New York’s Twin Towers. Al Qaeda-trained Somalis brought down a U.S. helicopter in October 1993 in Mogadishu, Somalia. In August 1996, Osama bin Laden publically declared war against the U.S., and in August 1998, al Qaeda bombed the American embassies in Kenya and Tanzania. The USS Cole was attacked by suicide bombers in October 2000. These were the major attacks that succeeded; there were others that were foiled.

These attacks were not isolated acts; they were tactical actions, part of campaigns designed to attain strategic aims. Al Qaeda’s campaign objectives are:

- Conduct “bleeding wars,” wars intended to defeat Western powers in Iraq and Afghanistan by causing their withdrawals, and attacks on Europe and the U.S. intended to further bleed the West’s will.

- Establish safe havens and franchises throughout the rest of the Islamic world, the ultimate franchise being Palestine, with the intent to create bases for future operations as well as cadres of leaders and fighters who can take advantage of local situations as opportunities arise.

Al Qaeda’s three strategic aims are:

–  Drive the U.S. from the Muslim world.

–  Destroy Israel.

–  Create a jihadist caliphate along the lines of the Ottoman Empire at its height.

The U.S. should understand by now that al Qaeda’s aims are to control land and peoples. Al Qaeda may use irregular forces, employ terrorist, guerilla and insurgent tactics, and be a network rather than a nation-state, but its strategy is a classic offensive one: conquer, defeat and control.

Though pushed out of Afghanistan in 2001, al Qaeda has retained its safe haven in Pakistan, from which it threatens that country’s government and seeks to return to Afghanistan once the U.S. departs. Al Qaeda has taken advantage of the civil war in Syria and established itself as a main contender for power. It is on both sides of the Gulf of Aden, the southern entrance to the Red Sea: in the Arabian Peninsula (on the Yemen side) and in East Africa and Al Shabab (on the Somali side). Another group, al Qaeda in the Lands of the Islamic Maghreb, is active in Algeria, Mali, Niger and Mauritania, and it has links to other terrorist and criminal organizations. An al Qaeda affiliate, the Islamic Emirate of the Caucasus, operates in North Caucasus, Chechnya and the surrounding areas. These are the main affiliates; there are other associates, supporters and sympathetic organizations. The Army of Islam operating in the Gaza Strip, for example, is inspired by al Qaeda, even if it is not yet a fully recognized affiliate. The network is dynamic and complex, and names change as do leaders; the threat does not.

This is the enemy context against which one must understand U.S. war aims and strategies. Following 9/11, the Bush administration used a counteroffensive strategy. America waged war in three theaters: Afghanistan, Iraq, and globally against al Qaeda leaders, networks and support activities. This was a strategic counteroffensive against terrorism and those who support it, but it was never adequately resourced or conducted properly, domestically or internationally. As such, it was unsustainable. Furthermore, it was an overly militarized strategy with insufficient attention given to the diplomatic actions that would be necessary to capitalize on military success and create long-term solutions.

The Obama administration withdrew from Iraq, is withdrawing from Afghanistan, and has focused its attention on disrupting, dismantling and defeating al Qaeda. We initially employed a strategy of attrition, a strategy focused on capturing or killing selective al Qaeda leaders and operatives. This strategy also continued the emphasis on military action.

Over the past decade, the strategic initiative was sometimes with the U.S. and the West, other times with al Qaeda. Clearly, both sides have made mistakes and miscalculations. Both sides have had internal disagreements as to strategies, policies and campaigns believed necessary to achieve war aims. Neither side is guaranteed to win. Each side has been partially successful. As to the U.S. and the West, bin Laden is dead and al Qaeda may be disrupted at specific times and places or in specific ways, but it is neither dismantled nor defeated. As to al Qaeda, they might claim to have driven us from Iraq and Afghanistan. They have expanded their safe havens and franchises and continue their bleeding wars and raids. They have not destroyed Israel, nor have they created the caliphate they desire.

Democracies generally have difficulty sustaining will in protracted wars of attrition. Perhaps sensing that the assumption underlying the U.S. strategy of attrition—that America can last longer than al Qaeda and that attrition will prevent the enemy from its campaign objectives and strategic aims—was problematic from the start, the President announced a new direction in his May 28 speech at West Point.

In announcing the third strategy since 9/11, the President quoted Gen. Dwight D. Eisenhower’s position that “war is mankind’s most tragic and stupid folly; to seek or advise its deliberate provocation is a black crime against all men,” but Eisenhower’s position has a corollary: Once war is forced upon you, as it was on 9/11, it is equally tragic, folly and a crime to prolong war unnecessarily. Many of the soldiers, sailors, airmen and marines being recruited now were 4, 5 and 6 years old on 9/11.

The President’s new strategy is a shift “to more effectively partner with countries where terrorist networks seek a foothold.” He did not change the part of the strategy associated with killing or capturing individual enemies when that is possible and consistent with the conditions the administration has set. This new strategy appears to be an offensive strategy of leadership attrition mixed with coalition warfare; it does not appear any more sustainable or effective than the other two strategies America has attempted.

The problem with this strategy is that the U.S. will be partnering with governments and security forces that are fledging, weak, corrupt or otherwise ineffective—the very environments that al Qaeda uses to establish its foothold. The time necessary to make effective partners out of these countries will more likely inadvertently help al Qaeda’s strategy rather than achieve U.S. war aims of disrupting, dismantling and defeating the now-transformed al Qaeda network. Moreover, targeting individual leaders or operatives as we develop partners, while necessary, does not appear to be sufficient in providing a decisive advantage. Executing this strategy is likely to commit the next generation to a war.

The U.S. and its allies need a more comprehensive strategy—one that retains the efforts to make partners out of some nations and to wear down selective al Qaeda network leaders and operatives—but it involves more. Perhaps the most critical component is conceptual. The President rightly lauded American post-World War II wisdom in creating institutions that helped keep the peace and support human progress. Such wisdom and leadership have been absent in creating the international legal and diplomatic institutions necessary to fight a global war against a non-nation-state. If al Qaeda were a nation-state invading countries and using force to achieve the strategic goals as it has, the world response would be much different from what it is now.

More aggressive action is also necessary to confront and reduce the already existing and expanding al Qaeda network safe havens. These actions must be more like strategic or operational raids than invasions and occupations. The U.S. cannot do this alone. Allies must be involved, and the partners we seek must make up a substantial part of any raid, but they cannot do this alone either. If they could, they would not be in the position they are in, and to wait until they are capable is to wait too long. Military action alone, however, is not a long-term solution. Therefore, the U.S. and its allies should insist that the partners we seek implement a governance and security reform agenda as a condition for help in reducing the existing threat they face and assisting them in implementing this reform agenda.

Perhaps this more comprehensive framework from which a strategy may emerge is unacceptable to the American people. If so, it is dead in the water. All should realize, however, that wars end in one of three ways: One side defeats the other; one side concludes that it cannot win so takes formal or informal action to end the fighting—even if temporarily; or both sides sense that neither can win so they reach an accommodation. U.S. strategies have, so far, prolonged the fighting.

Lt. Gen. James M. Dubik, USA Ret., is a former commander of Multi-National Security Transition Command-Iraq and a senior fellow of AUSA’s Institute of Land warfare.

The U.S. Military Needs a Redesigned Personnel System By Todd Harrison / View Original / July 15th, 2014

If the U.S. military were starting fresh, I would begin by designing a new personnel system. I would put more money into the forms of compensation service members value most, such as basic pay, while promising less in deferred benefits, such as pensions and health care. I would also rethink the antiquated officer-enlisted divide, allow for mid-career hires at ranks commensurate with skills and not require service members to relocate as often since many have spouses with careers of their own.

Put more money in basic pay and less in pensions and health care.

Starting anew, the military would not be burdened with the legacy bases and facilities it finds so difficult to close today. I would create as few bases as possible in the United States, knowing they will be nearly impossible to close in the future. Overseas bases should be built for scalability so they can grow when a region becomes a priority and rapidly shrink to a minimal caretaker staff when priorities shift.

Lastly, I would build combat forces that leverage our advantages and are mindful of the threats we are likely to face in the future. I would raise the share of resources and the institutional stature of enabling forces within the military, such as space, cyber and logistics. These forces are key to helping our allies and partners better defend themselves, and our alliances are one of our great competitive advantages. I would also place a higher priority on forces designed to operate in more contested environments and over longer ranges and invest in unmanned systems to the maximum extent feasible.

While this is merely a thought exercise, none of the things listed here require starting over. Each of these things can be accomplished through incremental change. All that is required are open minds in Congress and in the military — and an electorate that holds both institutions responsible for better stewardship of the nation’s resources.

Todd Harrison is the senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments.

Shifting Threats Spur Demand for Fighter Jets By Daniel Solon / View Original / July 14th, 2014

On Bastille Day in Paris 100 years ago, spectators at the traditional military parade could scarcely have imagined the scale of destruction that was about to be unleashed on much of Europe, including the first use of military air power.

Since then, control of airspace has become a basic strategic doctrine. But which airspace, and how to control it in a period of game-changing developments in weapons, sensors and cybersystems, are questions as challenging as at any time in the past century.

While geopolitical threats are shifting fast, most military budgets are still locked down by post-recession austerity policies. But even though governments may want to cut military spending, defense needs are pushing the other way.

Russian and Chinese expansionism, real or perceived, has revived the specter of Cold War confrontations in Eastern Europe and East Asia. Meanwhile, in the Middle East, boundaries drawn after World War I are disintegrating, with a risk of sectarian and regional power plays potentially affecting governments from Central Asia to the Arabian Peninsula and the Sahara.

Richard Aboulafia, an analyst at the Teal Group in Fairfax, Va., said he expected this week’s Farnborough International Airshow to see makers of tried-and-trusted fourth-generation fighter planes pulling out all the stops to sell into the Middle Eastern market. The term “fourth generation” is applied to planes such as the Eurofighter Typhoon, the American F-15 or the French Rafale, originally designed in the 1970s and upgraded since then to incorporate some modern stealth and electronic warfare technologies.

Air power, Mr. Aboulafia said, “is becoming less about platforms and more about systems, and systems of systems. The importance of an airplane is being dwarfed by the value and importance of its interior technologies and by the value of all the sensors, data links and connections that make it much more effective.”

An example of that trend is the Gripen E fighter program by Saab of Sweden, which incorporates increasingly advanced electronics and weaponry into a relatively inexpensive existing airframe. Brazil signed a deal in December to buy 36 Gripens, and Saab is prospecting for more customers in Asia.

In India, meanwhile, Laurent Fabius, the French foreign minister, and William Hague, the British foreign secretary, have been jostling this month to sell either Rafales or Typhoons to the new government of Prime Minister Narendra Modi.

In Asia, however, Mr. Aboulafia said, what China’s neighbors perceive as its increasing assertiveness has placed a premium on stealth technology and interoperability with American forces. That, he said, spells “F-35” to him.

The highly stealthy “fifth generation” Lockheed Martin F-35 was described by Prime Minister Tony Abbott of Australia in April as “the most advanced fighter in production anywhere in the world.” Australia has ordered 72, with the first expected to enter service in 2020.

Whether Farnborough will provide a platform for more orders, however, is uncertain. Already long delayed and far over budget, the F-35 program suffered further embarrassment this month when an engine fire during testing led the United States military to ground its entire fleet, raising a question mark over the plane’s ability to even turn up at the British air show.

As governments gear up to meet near-term threats, they must also look ahead into a disturbingly different future, where geopolitical disruptions are matched by drastic technological changes in cyberwarfaredrones and hypersonic flight, among other areas.

At least some of those developments can reasonably be projected to a 10-year time horizon, though many others remain cloaked in secrecy.

In February, the United States Air Force said it planned to buy 80 to 100 “Long Range Strike B” heavy bombers, with an optional unmanned flight capacity and the ability to “loiter” over a battle zone, at a price of $550 million each. They would enter service in the mid-2020s.

Using existing technologies, the planes would incorporate cutting-edge electronics, making them harder to target than the current B-2 stealth bombers, which military analysts say will be vulnerable to Chinese countermeasures within a decade.

Mr. Aboulafia said he expected intense competition for contracts by all the major defense players, with “everyone hoping for a piece of this $100 billion project.”

Even more futuristic projects include the X-51 “Waverider,” a program of Boeing’s Phantom Works division. In a flight a year ago, the X-51, an unmanned supersonic ramjet that surfs on its own shock waves, reached Mach 5, five times the speed of sound. Technology from the experimental program could be used in a hypersonic missile planned for service in the mid-2020s, to be launched from B-2 bombers or F-35 fighters.

Not to be outdone, Lockheed Martin’s advanced development division has proposed a pilotless spy plane that could fly faster than a speeding missile, at Mach 6, or twice the speed of the long-retired SR-71 Blackbird reconnaissance plane.

Named the SR-72, a demonstration model could be ready by 2018, with prototype testing in 2023 and an operational version in service by 2030.

The cost, said Alexandra Ashbourne, a military analyst based in London, could be around $300 million per plane, “which only the United States could afford.”