We must build sovereign capability
Remember when the White House briefly said that Claude Fable would only be available to US citizens? Even our friends will act in their own self interest, so we should act in ours.
One of my business mentors, Matt Dyer, told me, "No one wants to admit it, but the goal of a business is to be a monopoly."
He had sold EatNow to Menulog in early 2015, and the combined group sold to Just Eat for $855 million later that year. Then he did it again with Bookwell (where I met him), an aggregator for booking beauty and wellness appointments, which is now Fresha.
The customers were salons, with the biggest ones on the most leftist street in the most leftist city in Australia (Chapel St, Melbourne). He was a hardcore capitalist selling infrastructure to people who were as left as left could get.
Still, every one of those salon owners wanted the same thing Matt wanted. To be the only place people book when they want that service in that suburb.
There is no clearer example of people objecting to monopolies in others, but not for themselves.
Peter Thiel makes a similar point in Zero to One. Capitalism and competition are complete opposites, because to accumulate capital you need margin, and margin is preserved through distinction that can't be copied. Under perfect competition, profit goes to zero.
The argument holds as you scale from the firm to the state. The goal of a country should be to be a hegemon, which means it can control resources, set the terms of exchange, and hold decisive force. Without a hegemon, everything goes to shit.
The Great Depression was as deep and as long as it was because Britain could no longer stabilise the system and the United States was not able to. Someone has to hold the currency, absorb distressed goods, and lend when nobody else will. Absent that, the system descends into chaos. Maybe it can find its own level over many years, but probably not before a lot of people die.
That is why the system needs a hegemon.
So alliances between countries are critical to trade and security, but they need to be temporary instruments which enable each country to build capability within its borders.
In the race of economies after 1991, countries decided that they no longer needed to make things. We could let Taiwan print the chips, let America carry the defence, and let China run the factories. We could specialise in whatever is left - in the case of Australia, maybe wool and ore - and for a while, that may have been the fastest way to grow.
But that security was temporary, and Europe has just found out what its lien was worth.
Seventy years of buying security from Washington looked permanent for the EU, right up until the guarantor started asking what it was getting in return. It took a bit of jostling from Russia and Iran, and one wavering commitment to Article 5, for Europe to remember that its defence was a subscription.
The alternative is sovereign capability. It's ok to rent, but only as a short-term measure while we build to own.
When the country controls its key capabilities, it has leverage. It can enter better partnerships, and negotiate from a position of strength in the interest of its citizens. Self-reliance is self-reinforcing. As the country gets stronger, it is able to be develop more self-reliant capability.
As founders, it is our responsibility to work within capitalism to create and stimulate sovereign capability. That means setting up businesses that make money which strengthen our infrastructure across defense, healthcare, manufacturing, AI, silicon, or anything else where "if they stopped selling it to us" makes us vulnerable.
Remember when the White House briefly said that Claude Fable would only be available to US citizens? That's what I mean. Even our friends will act in their own self interest, so we should act in ours.
When we do that, we're not just generating returns for shareholders. We're ensuring the future for our children, and theirs.