General Robert Spalding 2021 Interview:
Alex sits down with Brigadier General Robert S. Spalding III, whose impressive resume includes serving as Chief China Strategist for the chairman of the Joint Chiefs, senior Defense Official and Defense Attache to China in Bejing, and Senior Director for Strategic Planning at the National Security Council. Moazed and Spalding discuss the current tech landscape between the U.S. and China, taking a look at Elon Musk’s relationship with Beijing, the General’s role in limiting Huawei’s participation in 5G infrastructure roll out, and the Great Firewall being exported outside of China.
General Spalding has served in senior positions of strategy and diplomacy within the Defense and State Departments for more than 26 years, retiring as a brigadier general.
He was the chief architect for the Trump Administration’s widely praised National Security Strategy (NSS), and the Senior Director for Strategy to the President at the National Security Council.
Originally Aired: 05/04/21
#Geopolitics #Huawei #ForeignPolicy
Alex Moazed (00:08):
Hello, I’m Alex Moazed and welcome to Winner Take All. I am really excited to have a special guest with us here today. General Robert Spalding, the author of this really fantastic book called Stealth War. General, so great to have you with us.
ROBERT S. SPALDING III (00:26):
Great to be here. Thank you.
Alex Moazed (00:28):
So I could try and give some of your background. I’ve got your Wikipedia in front of screen shared right now, but-
ROBERT S. SPALDING III (00:36):
Who knows what that thing says.
Alex Moazed (00:38):
Yeah, well, there’s probably half misinformation or more at least these days. But anyway, so many amazing accolades just about your experience. So many interesting initiatives that you’ve spawned and help push forward, as a true patriot here for the country, what would be your overview? What would be your to describe some of that background and some of these very illustrious roles and positions that you’ve held?
ROBERT S. SPALDING III (01:09):
Well, I thought I was going to be a farmer and I saw this movie Top Gun and I’m like, “Hey, that looks like fun.” So I went and joined the Air Force and I thought I was only going to be there for one assignment. And one assignment turned into almost 27 years. And along the way you got to live in China, have spent a lot of time working on China foreign policy, and national security strategy and policy. And really towards the end of my career really set me on a different path. And so I’m a strategist, I focus on policy, but I’m also a tech entrepreneur. So it’s really come full circle for me.
Alex Moazed (01:56):
So you were on the national security council and we’re going to talk more about what you helped spearhead in that role around 5G, you were flying B2 bombers just a couple decade ago. You’ve just seen so many different parts of the military and Washington machine over your career. Ultimately a lot of that culminated in this book, right? And the subheader is Stealth War, how China took over while America’s elite slept. And that really maps back to, as you mentioned briefly there, your senior defense official and defense attache to China just over the past few years. So pretty recently what? Starting in the ’16, 2017 timeframe, but it was that whole life cycle. And then these past say handful of years, that really helped culminate in this book. Is that accurate would you say?
ROBERT S. SPALDING III (02:57):
Yeah, actually I left the Air Force in November of 2018 and started writing the book right away and it was done by April of 2019. So it actually was just a culmination of everything I’ve learned in my last few years in the Air Force.
Alex Moazed (03:18):
There are so, so many things that you talk about and we talk about on the show. It’s difficult for me to figure out where exactly to start. Let’s jump into the 5G stuff, right? Let’s start there. I want to talk higher level, but maybe let’s just start with some of that work that you did, and ultimately that was something that you recognize early on. You figured out probably one of the hardest things to do in the world, which is how do you gain consensus and get buy-in amongst a myriad of bureaucrats that don’t want to ever commit to anything? And what led you to say, “This is so important.” That we need to figure out this 5G thing. What was some more color there that really that light bulb went off, and then you said I’ve got to make this a key priority.
ROBERT S. SPALDING III (04:16):
Well, look, first of all, I had reached a point in my career where I was comfortable being done. And so not that I wanted to purposely end my career, but I wasn’t afraid of taking on a challenge. And so I knew I had a few months remaining at the White House and I’m like, how am I going to best spend the time? And everybody was talking about this new technology. My belief, my fundamental belief about warfare, and it’s been informed by everything that I’ve learned about the Chinese communist party is it’s really about information. It’s about perception. And the better you are at controlling the narrative, the better you are at winning this war. And I really saw our inability to protect our data, to really take sovereignty over our own information space was our biggest challenge.
ROBERT S. SPALDING III (05:18):
And so I said, “Hey, why don’t I take this on?” I didn’t get told to do it. I just said, “I’m going to do a study on 5G.” And so I started it and that’s how it came about. And I think part of my inability to read the tea leaves politically was really formed by the fact that I’m not a politician. I’m a war fighter. So I went out there and I started flipping over rocks. And unfortunately under one of the rocks was the telecom industry which didn’t like people poking around in there.
Alex Moazed (05:51):
The inherent assumption and concern, which we’ve talked about on the show is that if you put Huawei infrastructure into your nation’s communication and plan, then you have now just, it’s not even a Trojan horse, it’s not even like it’s hiding. You’ve literally just invited in the enemy. You’ve given them the keys to the kingdom. There is no real way to ensure that there isn’t a back door that they couldn’t turn it off, that they couldn’t view the data, that they couldn’t wreak havoc on your communication infrastructure. And it seemed like that was somewhat of a contentious assumption or accusation to make. And it just seems so obvious to me, but it still seems like that is not a moot point.
Alex Moazed (06:47):
It doesn’t seem like people have even fully agreed that that risk is a real risk, even though I think your work has been successful to keep Huawei out of the US and now I think the UK has signed on board with that and other Western nations and US allies. But that’s the fundamental underpinning of why you had to keep this thing out. But what was it like fighting that battle then, and still the battle rages on.
ROBERT S. SPALDING III (07:17):
So first of all, I’m a B2 guy. What do we do? We take out communication nodes. So when I started to understand, this was back in 2014, when a friend of mine that I’d met in New York sent me a report that one of our audit agency had done. And I realized that, okay, I can bomb a communications node with my B2 or I can otherwise control by providing the equipment that gets installed in there or having access to it. There’s so many ways to impact a nation’s infrastructure. Bomb dropping from B2 is just one. And I think that’s part of the myopia of Washington D.C. We’ve taken warfare, at least our version of warfare, which is applying military force to achieve a political outcome to its caricatured extreme.
ROBERT S. SPALDING III (08:14):
Like if I put one bomb here, then I’m going to make everything the way I want it. Well, in reality, that’s just one way of getting what you want. And we have basically neglected… We had during World War II we had the OSS. And the CIA used to be fairly effective prior to really its destruction after the seventies. And so we have one way of going after something and that’s dropping a bomb on it. But China has cultivated a myriad number of ways of doing that. And the biggest mistake I think that the Trump administration did in following up on what I had done with regard to the report is it became all about Huawei. It’s actually much more pervasive across our tech environment than just Huawei and Western companies share the same standards in technology. So it’s not just Huawei, it’s basically everything. And the way we’ve looked at it is to create this vulnerability that China takes advantage of.
Alex Moazed (09:25):
Our book won a Chinese award this last time I was in China, was 2018. I flew into the belly of the beast and I was the only foreigner in a room of 400 top government officials, academics, et cetera. And what they said is, we are attacking on three key planes, right? One is economically, one is militarily, then the other one is technology. And they’re across the full spectrum. And that’s the point you make. And, and really illuminate in a number of ways throughout the book so accurately. Is that they look at the full spectrum. War is the last spectrum, but there’s a whole bunch of other things that proceed that. And if anything in today’s environment are more important than kinetic warfare. And we talk about it on the show, we are in information war. It’s not like we’re going to be. Here we are currently in an information war. That’s some of how you view it as well, right?
ROBERT S. SPALDING III (10:21):
Right. And really, it’s just, I’m astounded every day about the scale with which the Chinese Communist party wages this war. 2020 is probably the most effective example of an information campaign that has been… It’s like shock and awe in Baghdad where in 21 days we basically took down the country. In almost the same number of days the Chinese Communist Party put in the pieces to take down civilized democracy around the world. And they did it using stuff that they had put in place years prior. And these are things that I didn’t even know. The report that came out of the Imperial College of London, calling for over two million Americans to die, and all those subsequent reports coming out of that school in epidemiology have been really biased to the extreme.
ROBERT S. SPALDING III (11:20):
Well, it turns out in 2015 Xi Jinping paid a visit to the school, gave them millions of dollars. And so they basically bought them off and they became part of the information campaign that was waged on civil liberties throughout 2020, and is still waged today. And so, yes, we are at war, we’re losing. In fact the single greatest campaign of the information war was waves in 2020, and still goes on today. Now, what’s happening is people are beginning to wake up, but man, so many of our civil liberties have been taken just in 12 months.
Alex Moazed (11:56):
Yeah. A number of civil liberties. There might be something in particular you’re alluding to for 2020, but maybe we’ll come back to that. But here’s something from Larry Summers. And this was when the whole thing around TikTok started to come about. And you can’t see this, but it’s one little blurb here. And they said, “What do you think about president Trump’s recently signed an executive order to block all transactions with TikTok and Tencent?” And he says, “I was surprised. It was very unclear to me what the rationale was. If there were sufficiently egregious espionage activity, I could imagine taking radical action. But that case has not been made. There were sufficiently large threats around sabotage of networks, I could imagine action.” He’s basically saying, there’s no evidence of the data being abused, of the CCP having complete access to all the data and TikTok and Tencent and all these Chinese tech monopolies.
Alex Moazed (12:52):
And it’s laughable, right? It’s laughable, but in a really bad way. You said it yourself, you’re a general, you’re not a politician, but these are smart people. Is it that they’re just dumb or are they bought off? Are they compromised? What is the gap? I just don’t understand it.
ROBERT S. SPALDING III (13:18):
Well, so, I don’t know if you recall, but just a few weeks ago it was revealed that the incognito mode within the Chrome browser was still being tracked. Your data was still being tracked by Google. So we know that Silicon Valley companies are tracking data all the time. Why we would not suspect the Chinese, look, part of it is hubris. On the part of Americans. I had it before my eyes were opened by the report that I had read. But it took me a time, a while to figure out that, okay, I didn’t have the right perspective and really hubris is one of the reasons. We believe that our system is infallible, maybe not infallible, but at least better than any other system. That really creates this lackadaisical attitude that leads to what China’s done.
ROBERT S. SPALDING III (14:20):
Now. There’s another portion of that. That’s what they are. That’s their information campaign. And there’s two things. One is, our rise is inevitable. In other words, we’re going to be the number one country. There’s nothing you can do about it. We have more people, we have more resources. We’re harder working. Americans are lazy as are other people in developed economies. And number two, we’re not a threat. We’re your standard run of the mill entrepreneurs. We don’t want to take territory. Both of those things are bogus. So when you put in our hubris and their basic, we’re inevitable and we’re not a threat anyway, then you have this, you have this attitude that’s like, and then I found it when I got here to the Pentagon, they started training me as a military diplomat and the things that we were telling them are exact same things they were telling us.
ROBERT S. SPALDING III (15:16):
Like, why are our talking points the exact same as ours? And that’s because people like Larry Summers and you saw it with Biden in his recent interview about the [Wiggers 00:15:27] or the Town Hall, where he says it’s their culture. They have so thoroughly controlled the narrative, both about what, what the Chinese people, themselves, 1.4 billion people live in China, what the Chinese Communist Party says. And then even what foreign diplomats say about China? They have been able to control that narrative completely. So if you work at CSIF, if you work in Carnegie endowment, in D.C. if you work in a law firm, if you’re a politician that has frequent forays in foreign policy or national security policy, and somebody asks you a question about China, what do the Chinese think about X?
ROBERT S. SPALDING III (16:09):
What almost always comes out of people’s mouth are the same things, and they’re all the same things that the Chinese Communist Party wants us to say. And so they have thoroughly co-opted the way we talk about China. And, and this is where Pompeo was trying to make the point. The Chinese Communist Party is not China, is not the Chinese people. What they want you to believe is that what the Chinese Communist Party says is that they are speaking on behalf of those 1.4 people, and their history and culture and geography and all the vibrancy of China. And in reality, they’re talking for themselves and they’re talking on behalf of the interests that they have in maintaining control and basically squeezing the Chinese people and everybody else for more money. So when you actually realize that, then you can understand why Larry Summers would say the things he’d say.
ROBERT S. SPALDING III (17:07):
Not only has he been very well enriched by the things he said about China because every time you say something positive, you get rewarded. If you say something negative, if you’re a China researcher, they pull your visa, or you don’t get that investment in your company or something. So it’s once you adopt that worldview, they just keep feeding you. And so I, when I was at the White House, I had to basically just say, “Look, we can’t say so-and-so is a Panda hugger and so-and-so is a China hawk. The truth is we’re all part and complicit in basically going along with this lie. And we have to own up to that as collectively.” Because when you start pointing fingers, then it becomes, “Well, so-and-so is a Panda hugger and so-and-so is a China hawk.” No, we’re all culpable for having bought into this lie.
ROBERT S. SPALDING III (18:10):
Now some like the China experts at Carnegie and CSIS and Brookings and other places that basically repeated the Chinese Communist Party’s mantra, I say they’re more culpable, but they’re like everybody else, they’ve been duped into following a pattern of a narrative that the Chinese Communist Party… They’re experts. That’s what they do.
Alex Moazed (18:42):
Is there even anything we can do?
ROBERT S. SPALDING III (18:43):
Yes. You would not believe the number of emails and direct Twitter messages I get from people who read the book and they’re like, “Oh, I get it.” What can I do? And the answer is there’s plenty to do. And what my job at the National Security Council was to educate my colleagues on what was going on and let them figure out in their… Where they were responsible, what were the actions that they could take. If you’re a business owner, there’s a lot of things that you can do. You can start to begin to think about how do you change the things that you’re oriented with in terms of providing more or less what China needs, which is essentially jobs. So if you’re moving your manufacturing to China because you want to get your higher margins. Well, you’re giving them what they want and you’re basically selling a little piece of your liberty. You just don’t know.
Alex Moazed (19:52):
Yeah. So Applico, we don’t work with China. We don’t work with Russia. We don’t work with communist totalitarian countries. And you actually touch on this in the book, and you just touched on it a minute ago where there’s a very big difference between the CCP and the Chinese people. And that’s the problem with what we talk about with these tech platform monopolies is when you actually look at a lot of the mechanics of a centrally planned and controlled government, and you look at the power and data and access of a large tech monopoly, lots of similarities there. And then when you put those two things together, and you actually see now as has been clearly laid out, particularly over the past few months ever since Jack Ma, they weren’t even not so nice, but ushered a few that grimaced president Xi and colleagues but they’ve made it very clear who is the king monopolist in town, and that’s the CCP and who is subservient.
Alex Moazed (21:00):
And the Chinese tech monopolies I think have so much vastly accelerated the CCP’s ability to control their people. Then when you do the calculus and say, “Oh, well, what’s the good and bad of these marketplace platform business models?” Well, when that’s in the hands of a totalitarian communist government, the calculus is clear, it’s a net negative. It is not even close. And you talk about this in your book to talk about how pervasive and how controlling the CCP has gotten, and in using technology as a mechanism to do that.
ROBERT S. SPALDING III (21:40):
Right. And well, I mean, Silicon Valley really created this incredible enterprise for taking data for taking data about you and turning that into influencing your behavior. That’s in a nutshell the business model that they built. Well, the Chinese Communist Party looked at that and said, “Okay, I can influence your consumer behavior, but I also can influence your social and political behavior.” So now I’ve got to trifecta, and, oh, by the way, because we’ve connected all these data pipes to the entire world and we’re plugged in, because the cold war ended and everybody thinks that we’re great. Now we’ve got data pipes everywhere. And so while Google, Facebook and Amazon have a lot of power to begin to shape your perceptions of the world, Chinese communist party is basically plugged right into that same enterprise. And their goal is to dominate it all.
ROBERT S. SPALDING III (22:40):
Kai-Fu Lee when he says we want to be the Saudi Arabia of data. Oil was one thing, but your information, what you do, who you are as a person that’s carried over the internet and information technology pipes, and then data centers that’s being processed today. I mean, that really it enables the owner of that data to begin to overstep the bounds of where… So if you read the federalist papers, and Alexander Hamilton wrote many of those. If you read those, his point about a union was the fact that collectively the States could protect their interests. Well, what you find now is that your borders no longer protect your interests because you have this digital border that doesn’t exist.
ROBERT S. SPALDING III (23:41):
And so because we’re so digitally connected and because of the global supply chain and the flow of money, so information, technology, talent, and capital, you have the ability as a national nation state actor like China to begin to direct everything. And we acknowledge, it’s funny, Europe created GDPR. We acknowledge the power of Google, Facebook, and Amazon, but then we don’t look at a totalitarian regime that has Baidu, Alibaba, and Tencent. Oh, by the way, they have Facebook and Google and Amazon beating down the door trying to come in to China. So that’s another lever. So you have total control over this enterprise. And we’re just like, it’s amazing to me how oblivious people are.
Alex Moazed (24:26):
You made a little point just there. Can we double click on that Google, Facebook, Amazon beating down the door. We’ve talked a lot about on the show how it is such a travesty that US tech monopolies are reticent to work with the US department of defense. They put on a good show. They being the US tech monopolies say that isn’t the case, but Facebook too, Facebook I thought was like, “Oh, we don’t want to do stuff in China.” But that’s what you’re seeing is, hey, they’re driven by quarterly short term profit. China holds the money in the excess, and they’re dangling that carrot and getting more control and compliance from our US tech monopolies. Is that what you’re getting at?
ROBERT S. SPALDING III (25:13):
Right. And what Google will tell you behind the scenes is they’re going to steal it anyway. So might as well partner with them. And by the way, every industry does this. And so we’re no different than anybody else. It’s just that the people in D.C. So when you think about, go back to the constitution and how we created this country, the people in D.C. are thinking on the wavelengths of a physical world. They don’t understand the digital work. And even when you had these tech CEOs come in for interviewing, I believe it was last year, they didn’t even know what questions to ask. They don’t understand what Silicon Valley is about. But I guarantee you that Xi Jinping does, it just came out in the Epic Times, the speech that he gave about controlling the internet, people were like, “What? The Chinese want to control the internet?” I don’t know. It’s pretty funny that the tech industry being as woke as they are, don’t realize who their real master is.
Alex Moazed (26:20):
I am not an optimist that any regulatory or legislative oversight will come to our tech monopolies from within the United States. But let’s go back to Great Firewall you have a little clip here. In the West the internet was built for connectivity. China and keeping with the CCPs original authoritarian thought police mentality, and driven by its understanding of data as a strategic weapon, constructed a cyber defense system that can deny connectivity.
Alex Moazed (26:47):
A lot of people, hopefully certainly the people watching this show know about the Great Firewall, two questions to dovetail on this. What is your visibility into them now exporting that great firewall technology to other countries like Russia. And I think it’s reported in parts of Africa. And then I’ve got one other farther out fun question to also dovetail on piercing the great firewall. But it’s being exported. But we don’t hear much about that. Do you have visibility on that?
ROBERT S. SPALDING III (27:21):
Unless you study this you won’t know this. But most Chinese language speakers today, particularly if they’re talking to anybody on the mainland, have WeChat. So you have the firewall in China. You can’t have Twitter, you can’t have Facebook, you got to have Chinese apps. You can only have Chinese apps. So now everybody gets on WeChat. You got a billion people using WeChat in China. Then they begin to travel, and they leave China. As soon as they land in America, they don’t all of a sudden, “Hey, I want to download Twitter and Facebook on my phone.” All their family back home is on WeChat. All the Chinese language speakers in the United States traveling or living here are also on WeChat. So what happens is because of this platform WeChat, which has basically been copied from other applications in the west and improved upon, it’s basically a super app.
ROBERT S. SPALDING III (28:26):
Once you’re in WeChat, you don’t leave. It becomes like the operating system for your phone, because you can do just about everything you want, that you would use other apps for in say not in WeChat context. And so now part of this globalization thing, this intermixing of populations is that we believed, and same is true for the internet. We believe that when the Chinese nationals came into the United States, it would begin to see our culture. See what kind of system we had and say, “Hey, we liked that system a lot better.” But what happens is they come over and, say they’re a student, they’ll be in our universities. But they still use their social media apps.
ROBERT S. SPALDING III (29:14):
They continue to speak Chinese. They stay in clusters because we have so many of them, and ultimately the Chinese do a good job of preventing them from leaving the great firewall, even when they’re abroad. And this is a system where within China, the geographic boundaries of China, there’s no competition for these apps and that allows the Chinese government to export it. So in the Chinese language, it is exported through the apps that they have in China and that they use regularly. Also payment apps, like Alipay. You can use WeChat also as a payment app. That back the other day I saw you can go to CVS and use Alipay. So that’s one of the ways they export it. The other way is through applications that for English language crowd, like TikTok. Now, what is TikTok, TikTok is basically an information vacuum cleaner and basically pays attention to how you use the app.
ROBERT S. SPALDING III (30:11):
And then that data gets sent back to China where they have algorithms that take how you use the app and then serve up videos that you’re going to want to watch. And so now they have you hooked on the videos that they want you to watch. And over time they can begin to slowly intermix videos that really have the message that they want you to… So they understand what you like. And then they start to deliver messages in that format, so that they’re more readily accessible. So they’re using the same tools that Silicon Valley use just to get you hooked, but they’re tools for a purpose, it’s for a control purpose and Xi Jinping has basically said so himself.
Alex Moazed (31:01):
You talk about the 50 Cent Party, 50 Cent army in the book. Our show has actually been a victim of that. It’s hilarious, but still nonetheless, that’s not like an accolade, they come after everyone, but they’re using then foreign Western social media platforms and communication platforms to your point to really project the image and try to influence opinion. I think that’s the big thing you’re driving home, right? They’re really masters of that, playing to our hubris and getting the right message across. So also with some, some plush money carrot and stick behind the scenes. But they’re doing 50 Cent Army. I’ve seen reports that they are using like LinkedIn and different platforms to recruit.
Alex Moazed (31:54):
You talk about it in your book. There are different kinds of recruitment expert programs, and they’ll literally pay you for expert advice. If you used to work at a jet engine factory or something like that that you’re talking about, so they’re using their own Chinese tech monopoly apps and then expanding influence abroad. And then they’ve got, you say millions of people in the 50 Cent Party that are then doing that to influence opinion. I’m sure there’s another group which is recruiting these expert pseudo spies abroad. It is impressive. It’s scary, but it is unfathomable I think to me or the United States to really understand how systemic and coordinated and how much scale they’re operating this ad. We have no idea. We don’t hold a candle to what is going on here, right? Or is there some secret group that I don’t know about buried away in the DOD or something that… It just seems like they are light years ahead of us when it comes to this information warfare, projecting the image, recruiting people, data collection, all of that stuff.
ROBERT S. SPALDING III (33:12):
It’s because they’ve embraced what Silicon valley built, and Silicon Valley did a great job at building this data monopoly empire, and the Chinese company Communist Party just basically took it because it made a lot of sense in terms of their context of warfare. So it shouldn’t be a shock to us, that this is what they do. It’s funny because people get upset at Amazon or they’ll get upset at Facebook and they’re like, “They are bad.” But they’re nothing compared to Baidu, Alibaba, and Tencent. Here’s an interesting thought experiment. So pretend like you’re Alexander Hamilton and you’re explaining the second amendment to somebody that has never lived in a… Or maybe has lived under an oppressive ruler. And so you’re saying, “Hey, we’re going to allow you to have guns. And you’re going to be able to defend yourself against oppression if this idea fails.” And then Zuckerberg walks in and he says, “What? Did you know that I can influence you to think that somebody is oppressing you, and you won’t even know it?” And so now you begin to wonder, okay, the second amendment defends me from somebody that I believe is oppressive, but it’s now possible to convince me that somebody is oppressing me without my knowledge or consent?
ROBERT S. SPALDING III (34:49):
Then you start to get into this question of, okay, in that context, what good is a second amendment? Because you could have a gun and you could use it, but you may be enticed or induced to use it against your neighbor, because you’re convinced that your neighbor is the threat. This is the power that we’ve never had before. Me as a B2 pilot, studying warfare from the air, it’s always been difficult to employ an airplane to defeat a population. Warden talks about [Five Ring Siri 00:35:23]. It’s really focused on the leadership of a country, the political leadership.
ROBERT S. SPALDING III (35:29):
Because the population, what tends to happen in air campaigns is when you bomb the population, they don’t get at the government. They get mad at the people bombing them. And so it turns out it’s very difficult to convince a population to overthrow the government using bombs. But you can convince a population that they’ve convinced themselves that they should overthrow government. Now, this is what China saw with Twitter and color revolutions and globalization and the internet like, wow, the United States is exporting this ability to question the system that you live in, that’s really dangerous.
ROBERT S. SPALDING III (36:13):
Nobody’s ever been able to do that in warfare before. You’ve always had to basically conquer and subjugate a people in order to get them to basically behave. But now you can actually convince them to do it themselves. And so they wanted to take control of that and own it. And quite frankly, as a war fighter, it’s the most impressive way of going to war because it doesn’t cost you anything, it’s not risky. And Silicon Valley has basically made it scalable. You can scale it, and you can scale it quite cheaply. Think about the $800 billion a year that we spend on the military and think about the wumao, the 50 Cent Brigade and bots, AI bots, for much, much less than $800 billion a year, you can begin to move the levers of influence in your favor globally, as long as you build these global platforms, which is what Baidu, Alibaba, and Tencent are.
ROBERT S. SPALDING III (37:19):
And then Facebook, Amazon, and Google have basically, they allow you to take over their platforms and use them in ways that promote your message. They are actually selling their ability to influence the people whose data they collect. That’s how they make so much money. And so all the Chinese Communist Party has to do is, in addition to leveraging Baidu, Alibaba, and Tencent is buy ads on Facebook, buy ads on Google. And of course they do.
Alex Moazed (37:52):
Not only do they do that. And as you mentioned, they have leverage over the US tech monopolies and want to get access. That’s one of the two key things you talk about, right? A leverage point for China and get access to the Chinese market. Another example of it is for example, Reddit raising $300 million and guess where that money came from. That’s the other example you write, it’s either access to China or money outside of China. And you know that when Tencent puts money into Reddit, they put in 150 of the $300 million round. Tencent getting some goodies in terms of access. Maybe they get a nice little portal for the 50 Cent Party to do their job more. I don’t know, but they’re getting something for the $150 million more than just these many shares in the company. So it’s really genius have they’ve… And I think that’s your point, it’s not happening. They’ve done it. They penetrated, it’s everywhere.
ROBERT S. SPALDING III (38:54):
Yeah. Imagine if Zuckerberg he could basically call on the US military, the CIA, every government agency, to do the things that he wanted to do to expand his business. And that’s essentially the system that the Chinese Communist Party has, it’s very scary.
Alex Moazed (39:13):
Now. Okay. Let’s have some fun. You just tweeted about a favorite person on the show. Elon. Elon is a platform entrepreneur, PayPal co-founder, guy understands platforms really, really well. And he’s a genius in many other ways, but you say the CCP wants control of Elon Musk. They want Space X and Starlink to be under their control. Do you think that Starlink could pierce the great firewall veil? Someone’s got to be thinking about that, right?
ROBERT S. SPALDING III (39:44):
I think the Chinese Communist Party worries about that and I think… This was fun to watch because you watched the factory being put in, the Tesla factory being put in China, and you understand the pattern of behavior. It is they’re very conciliatory. Tesla owns their factory in China. Look, when I was there, this was back in 2002 to 2004 when I lived in China. I talked to this one guy was from a company from Germany. It was they were making industrial voltmeters, and they had built a factory in Shanghai and everything was going smooth, no problems. Then the Chinese Communist Party Comes knocking on the door and says, “Hey, remember those fuses you wanted to import for your voltmeters? You have to use Chinese fuses now. You can’t use those fuses.”
ROBERT S. SPALDING III (40:39):
And the guy that was running the factory basically had to go to Hong Kong and have somebody smuggle in the German fuses that they needed in order to keep this factory going. Because of course you can’t put bad fuses in an industrial voltmeter because somebody could electrocute themselves. So they couldn’t have that. Well, what he had set up and what the Chinese knew what he was going to do, they knew he was going to go in and basically smuggle these fuses in, now they got you. And now they can swoop in and take your factory and take your technology. Which is Tesla saying, I think it’s actually something different. I think they want control over Space X and the best way to take control over Space X is take control over Elon Musk.
ROBERT S. SPALDING III (41:32):
Now the stock price for Tesla has been, what’s been baked in is their sales in China. They’re the number one selling electric vehicle in China. And so all you have to do is basically start to put pressure on the fact that they can continue to be there as a company. And now you’ve got control of that overall enterprise. And so they’re thinking three dimensional chess. We think of government and business as two separate things, that is not the way they think. They think everything’s interrelated. How do I get access? Space X does a lot of government business.
ROBERT S. SPALDING III (42:13):
Starlink could be a challenge for the Chinese Communist Party. Hey, how do we jam 4,000 satellites? Maybe we don’t jam any satellites at all. That’s what the United States would do? We’d come up with this $150 billion DOD program to design this spectacular technologically complex system to block the [inaudible 00:42:40] coming from these Starlink satellites and like, no, we’ll go get the control of Elon Musk and make sure that he’s doing the things that we want him to do. This is the way they’re thinking.
Alex Moazed (42:52):
The only thing you can do is just decouple.
ROBERT S. SPALDING III (42:53):
Alex Moazed (42:54):
Once you’re there, they’ve got leverage. And so how do you just… You got to just decouple. Now what we see is we’re actually seeing, rather than decoupling, I think we’re seeing our US tech monopolies accelerating the coupling. Like you talk about it in the book around, you give some examples here in the nineties, early days of Alibaba. And somewhat that melding into Amazon with Amazon marketplace, we just saw Walmart marketplace two weeks ago. It was the most disgusting thing, general, Walmart comes out with a press release. They say, “We’re investing $350 billion in America.” Two weeks later, the head of marketplace at Walmart is in Shanghai saying, “Hey, guess what Chinese sellers? Now you don’t even need a us business entity to sell stuff on Walmart marketplace.”
Alex Moazed (43:49):
And so what I’m seeing January and February, 75% of the new sellers on Amazon, Chinese factories. So, not only are we gutting the American manufacturing system by our own US tech monopolies, marketplaces, then you’ve got the content platform tech monopolies that are censoring free speech, which is completely unacceptable. And it just seems like we’re just shooting ourself in the foot at literally every step of the way. So I’m glad that you’re optimistic because, man, I need some positive energy on this show. The poor subscribers are… Alex, stop talking about doomsday every day.
ROBERT S. SPALDING III (44:40):
Well, the great thing about the Chinese Communist Party, you ever watched the clips of the Charlie Chaplin films where you have 1000 police officers chasing that one guy and he gives them the slip. And they seem bumbling. Well, so the Communist Party has enormous resources they have and they all understand the playbook and they run the playbook very, very well. But they also have a fatal flaw and that is the system doesn’t allow for the transmission of bad news. It doesn’t allow for questioning of the goals of the Chinese Communist Party and herein lies the real challenge for them that I see. I don’t know if you’ve been paying attention, but shockingly it’s come faster than I thought, but certainly in the last few months, you see the Chinese began to make a move and begin to show that they’re going to go after Taiwan.
ROBERT S. SPALDING III (45:46):
So it’s coming and it’s more than likely after the Olympics, but before the next five years is out that we can see them and make a move on Taiwan. Now what’s going to happen is all of this headlong rush to get into China by these companies, they’re going to be the last ones in and the last ones to lose everything that they put in. So I think we’re at what I would call the last stages of this love affair with China. If you look at Chinese stocks, they had a tremendous, tremendous run in 2020. 2021 is not looking good at all. If you’re looking at the Hong Kong dollar, that’s not moving in the right direction.
ROBERT S. SPALDING III (46:35):
So I think what’s happening is we’re at the last stages of it. And they are trying to suck in as much capital innovation, talent and technologies they can before they make the move on Taiwan, because they know when they do that the door is going to be shut. And they understand that whatever they have, that’s what they’re going to have to play with. And so that’s where I see we’re at right now. So the good news is they’re wicked smart, but they’re also in some ways dumb.
Alex Moazed (47:10):
It seems a little unlike them, right? Aren’t they the ones that are forever patient? They don’t want to play their hand too quick. You think maybe the fact, and you talk about this a little bit in the book. We talked about on the show how much the United States is printing money, which is bonkers, but they’re printing three times the money that we are printing now, and they’ve been doing it for 10 years, if not more. Do you think that there’s some urgency just for other internal dynamics that they say, look, we got to take Taiwan while we can because eventually our house of cards might come crashing down. Or are there other forces there that are putting pressure on them to do a move like that? Because I agree, when they do that move, hopefully, yeah, it’s like the last nail on the coffin or one of the last nails in the coffin to wake everyone up and saying, “Hey, you should probably think twice about doing business with communists.”
Alex Moazed (48:08):
It’s funny. I didn’t grow up in this environment, but I can tell you my parents. You grew up in that environment where you say, yeah, communism not so cool. You don’t really want to do business with communists. It’s not a cool thing to do. And then that has been normalized the past couple of decades. What you’re saying is that’s on the way out. Taking Taiwan would accelerate its exit from that being just like an okay thing. Maybe people would feel more comfortable speaking openly about it. I know CEOs I talk to, big companies, they can’t get their money out of China. They’ve dumped all this money in here. If they’re making money they can’t take their money out. They’re not happy. What do they do?
ROBERT S. SPALDING III (48:51):
And they don’t want to tell the market. They don’t want to tell the market. They’re terrified because when they tell the market, the whole charade is up for them. And so the answer here is you don’t want to be the first. You don’t want to be what was the what was the first in 2008 to fall? Was it whatever, the first bank that went, they just-
Alex Moazed (49:15):
ROBERT S. SPALDING III (49:16):
Bear Stearns, there you go. But everybody else said save. So the idea is just don’t be the first. Somebody, it’s going to be somebody, we know it. And they’re going to be sacrificed, but then the government’s going to step in, oh, because we’re going to have collapse in the economy. So that’s what they’re all sitting there waiting for this horrific train crash that you know is coming. And yeah. Is it stupid? Yes. But that’s the whole point of a dictatorship, is stupidity can be allowed to go because who’s going to basically tell the emperor he has no clothes.
Alex Moazed (49:57):
Definitely not Jack Ma, he’s learned that lesson.
ROBERT S. SPALDING III (49:59):
Or Elon Musk.
Alex Moazed (50:00):
Right. Yeah. Maybe that’s your next book general. It’s The Great Reset, but the correct version of those words. It’s saying, “Look, we just got to write China off. We’re going to take a hit.” There’s just Ponzi scheme after Ponzi scheme going on in that country. If we said anything about it, they just take all of our assets. We don’t even really own these assets anyway, but be nice to us, stock market essentially. Right? Someone’s got to burst that bubble. And when once it pops, then everyone can start to really speak openly. Whereas right now they’ve got everyone bottled up very succinctly and it’s impressive how they’ve been able to do it? But you know what? I love that point of view. I like it. I like it. And let’s wrap up on that note. General, what else you got going on? Anything else we should know about? You mentioned tech entrepreneur in the beginning there, what else is going on in your life now post-book here?
ROBERT S. SPALDING III (51:02):
Yeah. So I told you I thought I was going to be a farmer. I got a PhD in economics and math because I thought, “Hey, I’m going to go to Wall Street and make my fortune.” So and then I watched the tech bubble happened and then burst. I’ve always had a passion for technology and innovation. And so I have basically been working on for almost three years now, a concept on how do we protect critical infrastructure? How do we secure data in a free society? And so that we’ve turned that into a company and we’re just starting to begin to market that and we’re actually going to go public in June and talk about what we’ve done, but we’ve taken basically an approach that says data is so critical, not just a country, but to community.
ROBERT S. SPALDING III (52:02):
It helps them bond. It helps them thrive. It helps them prosper. Helps them be more productive. And yet we not only are willing to give it up to these large tech monopolies, we’re willing to give it up to foreign countries. So what we’ve created is an ability for communities to basically get control of their data and protect their critical infrastructure. So that’s what I’ve been working on. I think if you look at this just like the Chinese do. Wei Ji is a word for crisis and it’s disaster and opportunity put together. And that’s what you have. You have all these companies are pouring money into China, they’re going to lose it. But there’s going to be enormous opportunity for those that think properly about what are the opportunities that are going to come when that great reset happens? And have you positioned your company, your technology, your strategic thinking around this idea that this great reset is coming. And I think that’s going to be the ones that really benefit from it.
Alex Moazed (53:12):
Wow. I love that. And I hope we’ll have you back on in a couple months here once you go live, we’d love to hear more about this. That’s it for us today General Spalding, thank you so much for the time, Stealth War, a wonderful read. Thank you sir, and thank you for your service.
ROBERT S. SPALDING III (53:29):
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