In this episode of the Rare Earth Exchanges podcast, host Dustin Olsen and co-hosts Daniel O’Connor and John Parkinson engage with Ian Murphy, a China subject matter expert, to discuss the critical issues surrounding rare earth supply chains, China’s strategic dominance, and the implications for U.S. national security. The conversation delves into China’s demographic challenges, the importance of innovation, and the need for strong alliances to secure supply chains. Ian shares insights on China’s dual energy strategy, economic coercion tactics, and the potential for future conflict, emphasizing the importance of preparedness and collaboration among allies.
Chapters
00:00 Introduction to Rare Earth Supply Chains
02:51 China’s Demographic Crisis and Its Implications
07:12 Innovation and the Future of China
11:19 China’s Export Controls and Economic Strategies
16:08 The Importance of Alliances in Global Trade
18:26 China’s Rare Earth Dominance and Semiconductor Strategy
21:27 Political Longevity and Potential Conflict
25:08 Stockpiling and Preparedness for Future Conflicts
28:27 Defense Contracting and Innovation
29:54 Future Predictions: Who Will Win?
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Dustin Olsen (00:01.23)
Everyone welcome to Rare Earth Exchanges podcast. You’ve got me Dustin and I’m joined by my two co-hosts Daniel and John. But today we’ve got a special guest Ian Murphy, who’s been studying at Old Dominion University and you’re working for security. What is that? Yeah. Yes. Perfect. Awesome. Well,
Ian Murphy (00:20.998)
Yeah, I’m working for SecureFence as a China subject matter expert.
John Parkinson (00:21.882)
Okay.
Dustin Olsen (00:28.294)
We would love to learn just a little bit more about your background right now. We also did an article on a piece that you wrote and we love just to kind of get your summary thoughts on that as well. And then we got some questions for you. So.
Ian Murphy (00:42.194)
Yeah, absolutely. Well, you got that right. I’m a contractor with SecureFence, where I really work with organizations to help them to understand China a bit better and
And I’d like to joke with people that I know a little bit about everything and if I don’t know the answer about China, I know how to find the answer. And no, I think the article that you guys wrote, you know, really emphasizes the urgency of, you know, building rare earth supply chain resiliency here in the United States.
Dustin Olsen (01:17.566)
Cool. Awesome. And do you want to talk about the article that you wrote and just kind of give us a quick summary about what’s in there?
Ian Murphy (01:25.894)
Yeah, absolutely. So I did something pretty interesting with my co-author Kevin Johnston. You know, we view this as a long-term threat, you know, as does rare earths exchanges. And what we do in our article is that we examine China’s strategic dominance in rare earth minerals and its impact on US national security, more so from a geopolitical standpoint rather than a scientific one. We highlight its use of export controls as leverage. You know, it poses
John Parkinson (01:50.338)
you
Ian Murphy (01:55.93)
to the global supply chain and it can really impact global security, not just for the United States but also for our allies as well. Really the core thesis of this is that China poses a structural threat, not just a threat du jour and until China commits to this fundamental political change, we’re going to constantly be vulnerable to the same thing over
and over again, even if we are able to get ahead of them, even if they do have an economic collapse, we’re still going to want to make these investments in rare earths.
Dustin Olsen (02:37.371)
Wow, yeah, we probably couldn’t agree more. So John, you had some questions. What do you got?
John Parkinson (02:40.659)
Yeah. Yeah. This is an area I really like to talk about and want to understand more because it’s pretty complex. I guess one of things in my readings is I hear a lot about the demographic collapse that’s coming for China. And this has obviously come about because of the one child policy many years ago. And this is baked in. This is going to happen. This is not a
Daniel O’Connor (02:59.186)
Thank
Ian Murphy (03:06.375)
with it.
John Parkinson (03:07.834)
something that just might happen. This is baked in. So the population is going to drop by something like a third. I can’t remember the timeframe, maybe 10 to 15 years from now. And that creates a whole different future economy. They’re going to have less people. And that’s been one of the strengths of China is having a cheap, effective workforce. So they’re going to have one third less. That creates inflation. That creates internal unrest.
Ian Murphy (03:33.063)
Yeah.
John Parkinson (03:36.098)
So I guess how does that change what the government is thinking over there and some of the decisions we’re seeing now, the decisions we might see in the future? Maybe you could talk a bit about that.
Ian Murphy (03:46.216)
Mm-hmm.
Yeah, absolutely. No, the Chinese demographic crisis, it’s something that’s always coming and it’s like construction in New York City. It’d be a really great city if they ever stopped building it. So there are speculations that China’s actively lying about the size of their population being 1.6, 1.8 billion people. We have local government municipalities that
are incentivized to inflate their population numbers. This is how they get central government resources to infrastructure projects, for instance. And there’s a really good propaganda value to inflating your population. It’s really good for convincing people that you should take the South China Sea to feed your population, for example. I’m not convinced that their population figures are accurate.
we see things such as ghost cities, see overdevelopment and underutilization of that development. But really getting back to your question, is that China is incentivized to do certain things now versus in five years or 10 years from now. The same was said about Russia, you know, that they’re going to have half the military age population in, you know, 20 or 30 years or so. So that meant that they were incentivized to go to war for their gain.
John Parkinson (05:13.881)
.
Ian Murphy (05:18.281)
right now to try to control choke points and be able to defend that long-term with a smaller military age population. China is trying to do something else though and rare earths comes into this. They’re trying to out-innovate their population decline. know on the know Chinese social media we see things such as you know robot dogs carrying farm equipment. see these little they look like a you know those wheel unicycles
that people used to write on, but they’re police bots. So they’re able to track down people at protests. I think that they were working alongside riot police in China. And then you see them taking out on the street and interacting with mothers with their children, showing them how cool these police robots are. So we’re seeing the rise of techno authoritarianism, but we’re also seeing the rise of industrial innovation.
John Parkinson (05:54.778)
you
Ian Murphy (06:18.057)
And that’s going to require a whole heck of a lot of rare earth minerals within China. So the implications that this has for us is that rare earth as an industry is growing, even if we are just looking at China. But also China is becoming a little bit more dangerous because they’re becoming more bold. They’re willing to devote resources to the rare earth industry. They’re also willing to devote resources to militarization right now. So that’s my takeaway from there.
demographic decline.
John Parkinson (06:52.921)
That’s really interesting. I often hear about Ray Dalio, the ex-Hedge Fund manager. He talks a lot about China and he looks at the great cycles that have happened economically for the last thousand years. And we’ve gone through many of these cycles before, generally take between 80 and 100 years. And America, he says, is coming to the end of what he believes is a big super cycle.
and China’s coming in next. And one of the points that I disagree with him is that I don’t, he believes innovation is what starts that next cycle and allows another power to come in. And the other power is sort of declining and it doesn’t innovate as much. And I disagree that China is innovating. think to get
Ian Murphy (07:34.535)
Hmm.
Dustin Olsen (07:35.645)
Okay.
John Parkinson (07:48.449)
innovation in the future, you need to have a country where the best minds in the world, not just in your own country, the best minds in the world want to come and do work and share those ideas and create new businesses, whole new sectors, those sorts of things. And I guess in China, you don’t have those sorts of incentives for entrepreneurs to go there and work and build things.
Ian Murphy (07:58.226)
Thank
Ian Murphy (08:11.793)
you.
John Parkinson (08:12.908)
And people talk about all the innovation that happens in China and we write about it, you know, in the rare earth space, they seem to be finding new things and cleaner materials and things like that. But is, I guess, I’m interested in your perspective on one Ray’s work, but do you think America can actually innovate ahead of China and take back, you know, and have another super cycle of America, which would be the first time in a thousand years, by the way.
Ian Murphy (08:40.359)
Yeah, you know, I don’t quite believe in determinism. So, you I don’t prescribe to cycles. I think that you need people and you need ideas to be able to grow and to innovate and to thrive. And you touched upon a lot of different things, but the one thing I want to point out to the audience that might not have China experience or understand the mindset of the Chinese government
is that China’s not immigrant friendly. The United States is immigrant friendly. Europe is immigrant friendly. So we in the West, however you want to define it, I define it by institutions, we have the institutions to accept immigrants, we have the will and the desire to accept immigrants and to bring in these fresh ideas to have them help innovate to solve the challenges of the day.
China really doesn’t have that ability. Chinese is not a global language, even though has some of the most speakers in the world. It’s a difficult language for non-native speakers to learn. There are not many other languages like it, and they’re really not immigrant-friendly. They’re not friendly to these foreign ideas. So take for example, Xiaohongshu, Red Note or Little Red Book. Do you remember when that was a popular app in the United States for a couple of days?
Dustin Olsen (10:08.732)
Briefly.
John Parkinson (10:10.113)
Okay, yeah, yeah.
Ian Murphy (10:10.439)
Thank you, everyone.
So that was a rough TikTok substitute, but it was something that the Chinese government never planned to release or to promote to foreign publics. So it wasn’t censored externally. So we were able to take a little look inside of there and see what’s going on inside of China. And then, know, things got closed down after that. It was really not tolerant of the way that we speak, the ideas that we have and, you know,
long-term TikTok creators who thought they were diversifying their online portfolios, they were just getting banned for very run-of-the-mill stuff. They complained about censorship in the United States for corporate censorship. They have nothing on the Chinese government. So China’s really not able to solve its problems by, you know, through immigration. And what that tells us as the United States is that we can.
And a recommendation I would have added into the article is joint ventures, know, international partnerships, the lifting of ITAR exemptions, and to treat, you know, other countries that we’re aligned with politically, treat them as if their production is American production. So you have that, you know, a very fast and efficient exchange between goods and services and bank transfers between borders. That’s probably one of the most important
takeaways from what you were just asking.
Daniel O’Connor (11:44.77)
Ian, I had a couple questions and I know my volume may not be optimal. But first of all, I have to really congratulate you both on your paper. It was a very important paper and we hope that we’re able to, you know, get it more distribution so that people can read it and understand it. You know, you touch on a couple key points.
Ian Murphy (12:06.567)
Mm-hmm.
Daniel O’Connor (12:09.569)
that are a confluence of points that represents real risk to the United States. One is the processing monopoly. The second is patent superiority. They are out patenting this by a long shot. Third are the strategic export controls, and I think we’re experiencing that now. That’s what just happened with the meetings in Switzerland and in London, you know, what they’ve been doing with their controls.
Ian Murphy (12:15.015)
Mm-hmm.
Ian Murphy (12:25.127)
Thanks.
Daniel O’Connor (12:39.045)
The next one is very interesting. It’s their dual energy strategy. I want to get into that a little bit because they seem to be based on what we’re observing. They’re moving away from petrol, but I can’t tell you if that is a cover or if that’s real and it’s going to be sustained. Could you talk a little bit about that and how rare earth complex, rare earth processing magnets dovetail?
Ian Murphy (12:58.183)
Mm-hmm.
Ian Murphy (13:06.791)
Yeah, absolutely. No, that’s, you know, that’s, that’s a very big topic. could talk about it all day. Yeah, I definitely enjoy talking about it. No patents, know, you gunk up the system, essentially, you know, you create, you know, disputes constantly, you know, as a way of locking up the competition. It’s something that the Department of Commerce would deem a non tariff barrier. You know, you’re not having the government, you know, come in and explicitly put tariffs on
these goods, but you’re still doing other, you know, backhanded things to stifle innovation, to stifle free and open competition that really goes against Western values and international globalization and liberalization. You know, so it is a concerted effort, but it’s one that’s really difficult for us to do as we currently stand. Export controls. This is more my bread and butter. I think of it
John Parkinson (13:39.036)
you
Ian Murphy (14:06.721)
going two ways, know, essentially supply and demand. China is in a really good position right now to restrict or to flood the supply of rare earths. So when would you want to restrict rare earths? If you’re in competition or if you believe you’re at war with an adversary, you restrict it so they can’t put things in their missiles. You you restrict it to harm the economy as a whole, you know. If they were to do it tomorrow,
John Parkinson (14:10.455)
Thanks.
Ian Murphy (14:36.521)
we wouldn’t be able to get microwaves, iPhones, cars, medical equipment, CT scans. We’d have to stop production of F-35s, Patriot missile systems, the Golden Dome would be doomed. So that’s when you would restrict the supply. We also have something called economic dumping. This is where you sell a whole lot of products under the cost of manufacturing those products. That’s illegal.
The Department of Commerce is what goes after that. They litigate these disputes. They charge fines that tend to try to rectify the situation. They don’t gift American companies more if they win. They just try to make up the loss. But by that point, if the Chinese are selling, let’s say, batteries for electric vehicles, under market value, let’s say $3,000 when they cost $10,000,
Then no one in America is going to make them and try to sell them for $3,000 because that’s below cost So essentially what that does is it targets the battery industry for cars And it stifles that competition they go out of business and then later when you’re the only player in town you raise those prices That’s illegal Under you know international guidelines and American law But it’s something that’s really slow and really hard
John Parkinson (15:57.86)
you
Ian Murphy (16:06.277)
to combat. So that’s why we’re taking hedging strategies now, is to prevent this massive flooding or this massive restriction. So we have to watch out for both things when we talk about supply chain security here. Now moving away from petrol, I think more as moving away from coal, but yeah, also petrol. I think it is real. I think China is incentivized under the Marxist-Leninist
government structure, but also their national security concerns. They want to diversify their energy. This is of course good for the world, but it also creates challenges for the United States if we were to go to war with China. We see fewer coal imports. They’re going to try to have fewer oil imports as well. This means more wind, more solar, more nuclear, and eventually fission, I’m sure.
What this does is that it stops you from having to have these long supply lines from the Gulf area around Iran, putting oil on boats and bringing it all the way through the Strait of Malacca through potential hostile Indian waters, pirated waters, and then in shooting range of short and medium range missiles from Taiwan. The Chinese don’t want to do that in a wartime scenario, so they’re hedging right.
now and they’re trying to have energy security now. That’s part of what we argue in the article. So it does have this national security objective and the Chinese explicitly lay out that they’re not doing this for moral reasons but rather they’re using moral language and they’re appealing to shared climate goals as a way of winning over the West and that’s within the framework of political realism.
Daniel O’Connor (18:04.031)
I think, and no, that’s a really great answer. I really appreciate that. You know, there are different strategies. And one of the things that I think we write about quite a bit, one is industrial policy. What does that mean? That’s a whole topic. But alliances. Ian, I feel like not enough is being put into a concerted effort for
You know, think Cold War, a tight alliance that’s among allies that’s meant to, you know, sort of externalize among friends the costs, divisions of activity across the value chain. What’s your thoughts on that? Do you feel like maybe we could start doing more in that area? If you were advising, you know, the White House, for example.
Ian Murphy (18:35.313)
Thanks.
Ian Murphy (18:45.959)
Thank
Ian Murphy (18:53.212)
Yeah.
Ian Murphy (19:02.695)
Yeah.
Man, that’s a really big and personal one right there. No, I’m a really big fan of…
John Parkinson (19:06.487)
Thanks.
Ian Murphy (19:12.007)
of alliances, of trading partners, of division of labor, it’s more efficient and it’s more prosperous. We look at the regarding model, it’s the thing to do. Trade does benefit everyone. And there are a couple ways that we could go with this. And actually recently there was a book published by think Edward Fisher called Choke Points.
This is how the US is able to leverage things like the dollar, like trade. These choke points that are hard to replace but have an outsized impact in an integrated global economy.
John Parkinson (19:45.815)
Okay.
Ian Murphy (19:58.568)
So, you we want to avoid giving choke points to our adversaries and we want to maximize the choke points that we have. I think it’s really great if we externalize the cost of the rare earths industry. You know, it’s a dirty industry, it’s not great for the environment, it takes forever to build. It might not be very big economically. I think you guys say it’s around $5 billion per year. But,
you know, it affects all the value chain. It affects almost all of our digital products today. The problem is, you know, not that the United States doesn’t have what China has, but rather everything so concentrated in China, you know, the production and the processing. But if we were to spread that out, let’s say over the European Union, I’m sure a lot of countries would be very happy to, you know, do processing, you know, to Canada.
to other NATO allies, to even Brazil and Vietnam who have really big holdings in rare earths. This diversification has the ability to lift all boats among the crew essentially. I have no problem with getting other countries rich and song to America as long as we are aligned in our values and our political objectives and we don’t plan on going to war with each other.
John Parkinson (21:28.403)
Ian, can I just ask, so with the West starting to build these ex-China supply chains, do you think China’s using its, I’m going to call it rare earth weapon now?
to get semiconductors because it knows that it won’t have this weapon potentially in five to 10 years time. Now, do think that’s part of their strategy?
Ian Murphy (21:51.494)
Yeah, it sounds like you’re trying to see if there’s connection between China’s rare earth dominance and them wanting to break our dominance on semiconductors.
It’s definitely possible. know, on one hand, on one hand, you know, it’s like a scorned friend who says, okay, well, fine, you could have your semiconductors. We don’t really care. You know, and that’s what happened when they came out with their own version of, you know, chat. Thank you, DeepSpeak. You know, they said, we don’t need your new semiconductors anyway. We did it with the old stuff. We came in under budget. Except it’s,
John Parkinson (22:24.608)
DeepSeq. Yep.
Daniel O’Connor (22:30.876)
you
Ian Murphy (22:35.305)
very hush hush and it’s under lock and key. So we really don’t know what they use. We don’t know what’s gone into it. We don’t know the costs. And then on the other hand, they’re doing things like they’re smuggling in chips. Some person’s in a suit and he has hundreds of chips in his clothing and he gets caught by airport security trying to smuggle these things into China. So which one is it? That’s a really tough call to make.
Daniel O’Connor (23:02.049)
you
Ian Murphy (23:05.225)
Yeah, of course they don’t want us to cut semiconductors off from them completely, you know, we cut off the new stuff, they don’t want us to cut off the old stuff because they’re still reliant on it, they’re trying to manufacture it on their own through SMIC. But the point I want to drive home is that China has used economic coercion before. There are hundreds of cases of economic coercion from China.
Like let’s take for example 2010, the Norwegian.
was at Nobel Prize committee. They gave a Nobel Prize award to Leo Schaubel, who was a Chinese dissident. died in Chinese captivity. And they memorialized him by taking a chair and placing it in the audience. And it was his empty chair to represent him in captivity. The Nobel Prize committee is a private organization. They’re an NGO. And China responded to this by cutting off
John Parkinson (23:39.382)
.
Ian Murphy (24:08.585)
Norwegian goods to the Chinese market. believe it was salmon and other Norwegian products. This is something that has an outsized impact on Norway, has a very minuscule impact on China. It’s also representative of what the Chinese think of Norway. It’s very Norwegian products, so it’s very symbolic in a way. But ultimately it didn’t really matter to China. And Norway was able to recover just fine because they’re among friends.
shows that this and other cases show that China is not willing to use economic coercion just yet in a go-go-bigger-go-home way. It’s always been symbolic, it’s always been a shot across the bow, it’s always been targeted against specific industries. I’m not convinced that they’re going to cut off rare earths anytime soon. I think it’s something that we need to prepare for because we have to remember they have a lot more to lose than we do if
trade were to be cut off tomorrow with China. It would be really tough for everyone within the global economy, also civilians, not just the government. But the Chinese have a lot to lose. As you mentioned before, unemployment rates in China, inflation, and then just the cost to the Chinese Communist Party, it would be absolutely immense.
John Parkinson (25:34.634)
That’s a good segue into my other question I really wanted to ask about these political longevity, I guess.
So obviously, you just went through, he’s dealing with economic problems, he’s got future problems coming up with population decreasing. And generally, when something like that happens, we’ve seen examples in Russia where Putin had similar issues. He’s, I believe, manufactured this war with Ukraine. He was talking about Nazis being there and all sorts of things like that.
Dustin Olsen (25:51.194)
Okay.
Daniel O’Connor (25:54.81)
Thank
Daniel O’Connor (26:02.042)
Okay.
Ian Murphy (26:02.407)
Thank
John Parkinson (26:12.213)
And that distracts the population. It allows you to change your economy into a wartime economy. Do you think that war is coming? Is he going to have to use this to stay in power? What are your thoughts on that?
Daniel O’Connor (26:16.985)
Thank
Daniel O’Connor (26:23.801)
Thank
Ian Murphy (26:28.091)
Well, to address what you said at very beginning, dealing with all these challenges, I certainly don’t envy the job. It’s a tough job nowadays to be the leader of a country. Is work coming? I’m not convinced.
You know, I’m not particularly an optimist, but I’m also not an alarmist. You know, I believe in, you know, preparing, but preparing incrementally. You know, we don’t necessarily need an operation warp speed, but more like something like a moonshot where we have this long-term outlook. You know, we’re not necessarily taking short-term profits into strict consideration. You know, there are many market mechanisms, like the three Cs initiative.
In Eastern Europe where it’s a market mechanism they invest in You know infrastructure that’s critical to national security and protecting Russia It might not mean a whole lot this year, but I’ll mean a whole heck of a lot in 10 years This is where they invest in You know boring things like changing the the railway gauges in Latvia Lithuania Estonia to the European rail gauges So they can’t connect easily to Russia you know things like LNG ports in
Daniel O’Connor (27:23.928)
you
Ian Murphy (27:46.042)
in Croatia, so they have energy security and they can get LNGs from the United States in the time of crisis. So there are ways that we can mitigate a wartime scenario without having to mobilize our economy, like the Russians have mobilized their economy. This mass mobilization,
Let me back that up. The Russians like to have a myth of the unlimited manpower problem where we think that the Russians just keep coming, you know, and eventually we run out of bullets. That’s a myth. That’s propaganda. know, every Russian soldier casualty, know, injury or death, that hurts the Russians and that puts incremental pressure on Putin. So there are these mechanisms of pressure on dictators who look like they’re above the law, who look like they
They can just throw manpower and resources at these things. And just like what we saw with Assad in Syria, at some point it just breaks. We don’t know when it is, but they’re creating a really weak structure. And I think Xi Jinping knows that from Assad’s fall and from the issues that Putin is facing and that the Russian economy is facing. So I’m not convinced that he’s eager to start a war.
but rather do something more symbolic. Like as you mentioned, Russia’s securitization of Ukraine, we use securitization theory, which is the process of turning something that’s not necessarily an issue in politics and turning into a security threat to justify extraordinary political measures. I feel like he’s going to securitize something and then try to solve that, even if it’s bite-sized, even if it’s smaller than taking all of Taiwan. It could even be things
like taking an outlying island like Kinmen or Matsu which are Taiwan government governed islands that are not even 10 miles away from China’s coast. How do you defend those? It’s really tough and I don’t think we have a good answer for that just yet. But I would keep an eye on these things. What are they doing incrementally? Are they starting to securitize the rare earth industry? Are they starting to do more little bite-sized bits of economic coercion against
John Parkinson (29:45.753)
Okay.
Ian Murphy (30:09.274)
the collective West, I don’t think they’re going to go big or go home. I think it’s too risky.
John Parkinson (30:14.843)
Just on that point, I’ve read this, I forget the guy’s name, but he’s the next CIA guy and he’s been looking at how China has been stockpiling in preparation for war. A whole lot of stuff that they have trouble getting and they’re slowly stockpiling all those different things.
Daniel O’Connor (30:30.774)
you
John Parkinson (30:34.196)
And they’re also, you know, seeing what America did to Russia when war broke out economically. So they put a whole lot of sanctions and things like that. So China has been selling down all their US debt that they own. And that, you know, that is something that you would do to prepare for war. I don’t know. It’s just really interesting to see these things, you know, they may not, but it looks like they are preparing.
Ian Murphy (30:49.627)
Thank
Ian Murphy (30:57.637)
Mm-hmm.
Daniel O’Connor (30:59.413)
Thank you.
Ian Murphy (31:02.119)
you
Yeah, you know, I want to fight against their alarmism in your voice. You know, I read the headline the other day that Japan was selling down their US debt. I don’t think we’re going to war with Japan anytime soon. But no, I think you’re right about stockpiling. I was very surprised at the start of this war, just how valuable Russia’s Soviet stockpiles were, but also Western Europe’s Soviet stockpiles were. A lot of the artillery shells that were given to Ukraine, a lot of the
Daniel O’Connor (31:11.447)
you
Ian Murphy (31:33.466)
the MiGs and jets that were given to Ukraine. A lot of it were Soviet made and just kind of, you know, stored in now what are NATO countries. You know, these countries haven’t now have interoperable and NATO standards for their weapons and their militaries, but also had Soviet era stockpiles that are not so interoperable with us. They just gave those bad boys to Ukraine and replenish their stockpiles with NATO compliant weapons and ammunition. You know, so that helped
to sustain the war on Ukraine’s side. And this is why the war has been going on so long on the Russian side, is these stockpiles. So I think this is something that we need to start looking into more, especially on the academic scene in national security studies. I know very broadly about the petroleum stockpile that the United States has that Biden administration dipped into. I know a little bit about the rare earths stockpile and the magnets stockpile
John Parkinson (32:26.101)
.
Ian Murphy (32:33.289)
that we have, but it’s not something that we have at the forefront of our mind. And I think that more research really needs to be done in this area. What is the value of the stockpile specifically for democratic countries, for the United States in terms of crisis? We don’t want to pay for warehouses millions, millions of dollars each year and have something not happen. We don’t want to throw money away. We have to do this efficiently. We have to do this prudently and we have to
really think about what we’re doing before you commit to a policy.
Daniel O’Connor (33:08.087)
I totally agree with you, Ian. A couple of follow-ups on that. You had mentioned ITAR and some things. I agree with you. I don’t think China wants war. think that they will continuously use this. They want money. They want to keep accumulating money, because that’s part of their broader plan. I think the problem, of course, is that
The behavior that comes from that is fundamentally opposed to what our intention was bringing them into the World Trade Organization in the first place, right? So if we look at the military defense contractors, let’s just say for a minute, we’re empowered to drive policy tomorrow. And of course, I’m talking general here.
Ian Murphy (33:44.263)
Thank
Ian Murphy (33:52.551)
No.
Daniel O’Connor (33:59.415)
The news was that President Trump is considering some Cold War era rules. I think it’s probably pretty smart. think we need to make sure our defense contractors are fluid and capable and resilient first. Would you agree with that?
Ian Murphy (34:15.878)
Yeah.
Yeah, absolutely. The world of defense contracting is a totally different animal to the private sector. In the private sector, have what economists would call perfect information. We know that’s not true, but theoretically, you perfect information. Defense contracting, you don’t. I can’t take my products and services right now in the United States, for example, and implement or sell or do the same training as in Australia. I have to go through a whole big process to do that.
to get approval, and this could be several months. So how do you, as a buyer and seller of these things, how do you plan long term? You can’t chase short-term gains, you can only look at the long term too. And then in the world of politics where we are, you could only do that so much, in these bite-sized chunks of let’s say four or five or eight years, it’s incredibly tough. And something beyond the scope of the piece that I wrote.
was you got to do everything you can to make this more efficient, process. You got to make security clearances efficient. You need to make weapons and materials and transport and logistics interoperable. You need to get international conferences. All the really nitty-gritty and boring stuff. You need more ITAR exemptions. What else?
you really need that free flow of goods and services and money and people. That’s what’s really going to drive innovation. That’s what’s really going to drive a united front against the adversaries of today and the adversaries of tomorrow.
John Parkinson (36:04.397)
These are amazing things we’re talking about and I reckon we could go on for hours, but I might ask a final question. Who…
Ian Murphy (36:12.188)
Yeah.
John Parkinson (36:13.683)
Who do you think is going to win in 50 years time? Let’s define win as who’s going to have the reserve currency of the world in about 50 years time. What are you thinking?
Ian Murphy (36:27.259)
Man,
You know, when I was studying my MBA, you know, entrepreneurship, know, there was this question, know, who wins market share? Is it the big established, you know, old, you know, large but very slow organizations, the established players in the game, or is it the first to market, or is it the most nimble? And there are arguments for all of them. It’s just a toss-up. You know, if you already…
have dominance, say you’re the most influential country in the world, have the biggest military in the world, you speak the world’s lingua franca, and you have the world’s reserve currency, don’t squander it. Don’t conduct yourself in such a way where people want to chip at the borders, chip away at your margins.
I think that one of the biggest challenges right now for the United States is maintaining itself is resiliency. In a book by Jeffrey Till, How to Grow a Navy, he discusses things like the rise of Britain’s Navy, the rise of China’s various navies, the United States, When you’re successful as a naval power, your success
breeds the downfall of your Navy. And one core thing that he says in there is that people who work in the maritime industry, you know, in its rise, you know, it’s a really tough job being at sea. You know, later on they want to go work on land, you know, once the country is already prosperous, you know, such as the Vikings. They weren’t necessarily defeated, they just transformed into more of a land power than a naval power when they start settling down, farming, and integrating into the cultures in which they settled.
Ian Murphy (38:28.233)
The same is true for our advantage right now. Don’t be complacent. You need to figure out how to your advantages sustained. You need to figure out how to conduct yourself in a way where people want to be your friend and be interoperable with you and to contribute to your success, but also not provoke potential adversaries into chipping away at your gains, little by little.
Daniel O’Connor (38:53.211)
I wanted to just tell everybody it was in the Journal of Advanced Military Studies, it’s called JAMS, and it was the 2025, this year, and it’s the winds of change how China’s focus on rare earth minerals reshapes the world. It’s a brilliant piece by Ian, who is here, and Kevin Johnsson, and we’re grateful for the work you’re doing, and it’s really brilliant stuff.
Ian Murphy (39:09.425)
Thank
Ian Murphy (39:19.719)
Thank you so much Daniel.
John Parkinson (39:24.499)
It’s gonna be a knockout by America
Dustin Olsen (39:26.166)
Thank you. So John, I want to ask you the same question. In 50 years, who do you think is going to win?
Daniel O’Connor (39:37.16)
Ha
Dustin Olsen (39:39.648)
Fair enough. right, Ian, any, yeah, yeah, innovation. Ian, any final words to summarize, everything into perspective for us?
John Parkinson (39:40.807)
It all comes down to innovation.
Ian Murphy (39:51.111)
No, I think you all have the right amount of urgency for rarest pie chains. Let’s make things happen.
Dustin Olsen (40:02.646)
Great. Let’s make things happen. So Ian, thank you so much for joining us and sharing your knowledge and your perspective. As John said, we could probably keep talking forever and ever. These are all topics that we’re interested in and we’re talking about all the time around here. So hopefully we have you back on the show again in the future, get an update on where things are at and maybe even just keep the conversation going. So thanks for coming.
Ian Murphy (40:28.423)
Thank you all so much.
Dustin Olsen (40:31.617)
See you guys later.
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