# Darren Farber on Iran, China, and the Rise of Neoprimes - [Invest Like the Best, EP.474]

Podcast: Invest Like the Best with Patrick O'Shaughnessy
Published: Jun 17, 2026
Reading time: 20 min
Canonical: https://podbrew.app/briefs/invest-like-the-best-with-patrick-o-shaughnessy-darren-farber-on-iran-china-and-

Patrick O'Shaughnessy welcomes Darren Farber, Managing Partner of Albion River and former special advisor to the Deputy Under Secretary of Defense, back to the podcast. They delve into critical defense and geopolitical topics, particularly focusing on the Iranian contingency.

The discussion centers on defining what victory truly entails in complex theaters like Iran, examining the strategic implications for the American industrial base, and drawing key lessons from the conflict in Ukraine. These points highlight the evolving nature of global power dynamics and military strategy.

Farber and O'Shaughnessy also explore the emergence of neo-prime defense companies and the essential support they require from Congress. This conversation sheds light on the future of defense innovation, national security, and the industrial capacity needed to maintain a strong deterrent posture in an increasingly volatile world.

## Key takeaways

- Adversaries like Iran and Hamas adhere to ideologies where martyrdom and self-destruction are perceived as victory, complicating conventional definitions of winning in conflict.

- Historical examples, such as Japan in WWII, demonstrate the extreme difficulty in forcing surrender or regime change against a deeply ingrained martyrdom culture, often requiring significant moral compromise from democracies.

- Dictatorships are paradoxically strong through state control but weak due to illegitimacy, making regime change challenging without a clear, viable alternative power structure.

- Eisenhower's doctrine of massive retaliation focused on nuclear deterrence, intending that a sole, extreme response could prevent smaller conflicts by raising the stakes.

- Taylor's flexible response doctrine emphasizes a range of conventional military capabilities to address varying levels of conflict, using tools like Tomahawk missiles and HIMARS for proportional action.

- For modern US military strategy, a combination of both maximal nuclear deterrence and flexible conventional response capabilities is necessary to navigate diverse global threats.

- Historian Dikotter posits that China is not a superpower due to internal illegitimacy and inherent weaknesses within its Communist Party.

- China's military is internally unstable due to frequent leadership turnover, corruption, and a lack of jointness, creating a low-trust environment.

- China's significant industrial "magazine depth" poses a strategic challenge, raising the question of whether it can offset the military's institutional weaknesses.

- The US is transitioning to multi-year ordnance contracts to increase military 'magazine depth' and close deterrence gaps, particularly for its Southeast Asian allies.

- US intelligence leverages the inherent illegitimacy and internal paranoia of totalitarian regimes like China as a strategic advantage in clandestine operations.

- Regimes based on illegitimate, monopolistic power, such as the Chinese Communist Party, are fundamentally corrupt and will ultimately collapse due to their inherent instability.

- Adversaries exploit democratic freedoms, particularly through social media disinformation, to create alternative realities and undermine the stability of free societies.

- Democracies face a critical challenge in determining whether to degrade portions of their freedoms, like speech, to protect themselves from external manipulation and disinformation campaigns.

- The intentional gridlock within the US constitutional design acts as a safeguard to prevent any group from rapidly co-opting government functions and protects against mass hysteria that could lead to authoritarianism.

- Annual continuing resolutions and short-term contracts impede the defense industrial base's ability to develop new technologies and build essential military stockpiles.

- Commercial technologies, particularly drones, are revolutionizing modern warfare by enabling rapid iteration, mass production, and asymmetric capabilities that outpace traditional military development.

- Multi-year congressional funding authorities are essential for the survival and growth of neo-prime defense companies, as continuing resolutions destabilize their operations and deter necessary capital investment.

- Integrating new military technologies is not simply about production but requires extensive training, simulation, and integration into existing joint warfare doctrines to uphold the moral commitment to equip service members effectively.

- The danger lies in corrupting the factual foundation that AI models rely on for decision-making, potentially rendering them unreliable in critical applications.

## 02:59 - 12:01 Defining Victory Against Martyrdom Cultures

Defining victory against adversaries like Iran and Hamas is challenging because their ideologies, particularly a hybridized form of Marxism and martyrdom called "red Shiaism," redefine winning. For these groups, self-destruction and sacrifice can be perceived as evidence of victory, even when facing complete physical devastation. This internal ideological framework means conventional military or political successes may not translate to a sense of defeat for the adversary.

Historical precedents, such as Japan's conduct in World War II, illustrate the profound difficulty in achieving surrender or regime change when an adversary is deeply committed to a martyrdom culture. Despite immense destruction, including two atomic bombs, Japan resisted surrender until Emperor Hirohito intervened. This historical parallel highlights the extreme measures and moral compromises democracies may face when dealing with such fanaticism.

Dictatorships, while appearing strong due to their control of state apparatus and economic elements like the IRGC in Iran, are also inherently weak due to their illegitimacy and untested nature. Achieving regime change is incredibly difficult, even if a large percentage of the population desires it, because a viable alternative power structure is necessary, and the existing regime often controls significant assets and resources.

The role of propaganda, or "positive propaganda" as marketing a political worldview, is crucial yet often overlooked by democracies. Adversaries like Hamas have demonstrated sophisticated, long-term strategies, such as a 20-year plan to influence Western universities, proving that a sustained commitment to shaping global opinion can be highly effective. Democracies need to actively engage in this space, as neglecting it leaves a vacuum for adversaries to exploit.

> It's such a satanical philosophy because it promotes internal destruction and sacrifice to the limit as evidence that you're winning.

## 12:01 - 14:01 Gulf States' Resolve and Competing Military Doctrines for the Strait of Hormuz

The Strait of Hormuz currently sees a primary presence from "us" and Iran, with other foreign-flagged vessels. Notably, Gulf Arab states, like the UAE, are exhibiting a much stronger resolve to fight than many might expect. The UAE has even left OPEC and declared its intention to participate in projecting force with its own military, driven by concerns that other nations might lose their will to fight due to economic pain.

Should a blockade occur in the Strait, overcoming it would necessitate a significant military response. This would require substantial increases in "magazine depth" (ammunition and supplies), more forces deployed to the region, and critically, an amphibious force positioned on the shore. Such actions represent a major escalation in military involvement.

This strategic challenge brings together two contrasting military theories. Maxwell Taylor, a four-star general and Chairman of the Joint Chiefs of Staff under Kennedy, advocated for using proportional force, viewing a reliance on maximal deterrence as a "deterrence gap." In contrast, Eisenhower's theory emphasized maximal deterrence, suggesting that any significant action would be met with the use of "special stuff" (superweapons), and warned against the military-industrial complex.

> The amazing thing is, the Gulf Arab states have a much stronger will to fight.

## 14:01 - 16:01 Contrasting Military Doctrines: Eisenhower's Massive Retaliation vs. Taylor's Flexible Response

The discussion explores the historical military doctrines of Eisenhower's massive retaliation and Taylor's flexible response, applying them to modern US military strategy. Eisenhower's doctrine emphasized nuclear deterrence as the primary response, leading to a stark binary choice in conflict. This approach implies that the threat of nuclear retaliation for even small incursions might have prevented involvement in conflicts like Vietnam, Iraq, or Afghanistan.

In contrast, Taylor's flexible response doctrine advocates for a range of graduated capabilities to address smaller infringements without immediate escalation to nuclear conflict. This approach allows for proportional responses using conventional weapons. Modern examples of flexible power include weapons like Tomahawk missiles and HIMARS, which provide the ability to enforce actions against minor infractions.

The analysis concludes that both approaches are necessary for contemporary warfare. Relying solely on a maximalist nuclear deterrent creates a 'very scary world' with limited options. A blend of both maximal deterrence and flexible response capabilities is deemed essential for effective national security, while also stressing the importance of clear political directives to maintain support and budget.

> I think it's fair to say you need both. If you took an exclusive maximalist view of Eisenhower of having this nuclear deterrent, your only response is nuclear deterrence. Can you imagine the world that we'd be living in?

## 18:02 - 19:12 US Military Prowess Contrasts with Chinese Internal Weaknesses Despite Bureaucratic Hurdles

The US military is highly graded for its ability to project force globally, despite ongoing bureaucratic challenges that necessitate modernization efforts approximately every two decades. Acknowledging a "pacing threat" is considered valuable for maintaining serious capabilities and preparedness.

This perspective is further illuminated by historian Dikotter's work, which details how China, despite its outward strength, is simultaneously weak due to internal illegitimacy and significant tension within its ruling Communist Party. Dikotter questions China's status as a superpower given these fundamental structural issues.

The illegitimacy of China's power structure creates pervasive distrust, even among high-ranking officials. For instance, the Chinese equivalent of the Chairman of the Joint Chiefs of Staff, who was close to Xi Jinping, has reportedly disappeared. This deep-seated fear of betrayal, where leaders are constantly worried about their personal safety, generates instability that cascades through all levels of the government, including its military.

> You're constantly worried that someone's gonna put a bullet in the back of your head, and then that form of illegitimacy cascades down through the immediate organs of that government to include its military.

## 19:12 - 20:02 China's Military Weaknesses Versus Its Industrial Might and US Response

China's military leadership has faced significant instability, with senior figures being replaced three or four times in the last three years. This, coupled with widespread corruption within the forces and missile crews, indicates a lack of jointness and a low-trust environment. Such conditions undermine esprit de corps and a belief in the mission's legitimacy, which are critical for military effectiveness.

Despite these internal institutional weaknesses, China possesses an enormous industrial "magazine depth," referring to its vast capacity for manufacturing and production. This creates a complex strategic calculus: can China's immense industrial strength overcome its fundamental military instability and corruption?

In response to this dynamic, the United States is embarking on a substantial effort to re-industrialize. This national undertaking aims to increase America's own "magazine depth" and industrial capabilities. This strategic move suggests a belief in the importance of conventional strength and sustained industrial capacity, moving beyond a sole reliance on nuclear deterrence.

> Can the magazine depth overcome their institutional weakness?

## 20:02 - 24:02 US Improves Military Readiness and Exploits Adversary Weaknesses

The United States is actively working to enhance its military 'magazine depth' by shifting from traditional one-year congressional funding to multi-year contracts for ordnance. This architectural change is critical for accelerating industrialization, closing existing deterrence gaps, and better protecting allies, particularly Southeast Asian nations like the Philippines, from small incursions. While the US maintains a leading position among Western nations in this regard, there is a recognized need to move faster.

A significant strategic advantage for the US lies in leveraging the inherent illegitimacy of totalitarian regimes such as China. Despite China's considerable economic and industrial might, its communist political structure fosters internal instability and paranoia within its leadership. This fundamental illegitimacy is seen as a crucial vulnerability that the US can exploit.

US clandestine services have rebuilt and strengthened their capabilities to infiltrate and influence these environments. The premise is that high-ranking Chinese officials, even those on the Standing Committee, often have relatives or connections in the United States, viewing it as a potential safe haven. This provides a mechanism for US intelligence to create internal uncertainty and potentially recruit assets, exploiting the fear and lack of freedom inherent in a totalitarian system.

The speaker posits that China, like the Soviet Union before it, will eventually fall within our lifetime, suggesting it could transition to a more open system, perhaps similar to Taiwan. This perspective emphasizes that while totalitarian regimes can appear strong, their fundamental illegitimacy contains the seeds of their eventual collapse, presenting both challenges and opportunities for the US.

> The illegitimacy of the Chinese, fundamentally an illegitimate power, is also our advantage, and we are making enormous strides in the clandestine services of co-opting that environment.

## 24:02 - 26:02 Illegitimate Regimes Are Destined to Fall, But Adversaries Exploit Freedoms

Darren Farber asserts that illegitimate dictatorships, such as the Chinese Communist Party, are inherently corrupt and will eventually collapse, much like seemingly strong regimes in the past that quickly fell. He believes in the natural human inclination towards freedom, which ultimately triumphs over repressive systems. This fundamental illegitimacy makes their long-term survival impossible.

A critical challenge for democracies is how adversarial nations exploit inherent freedoms to their advantage. Farber highlights the significant impact of disinformation spread through social media, which can disconnect people from reality by amplifying false narratives. This creates an environment where traditional gatekeepers of information no longer exist, a scenario the founders of democratic nations could not have envisioned.

The core dilemma posed is whether democratic societies might need to limit certain freedoms to protect themselves from these motivated and sociopathic adversaries. The concept of absolute freedom of speech, for instance, now allows for the widespread dissemination of disinformation, forcing a re-evaluation of how to safeguard national security and societal cohesion without completely eroding fundamental liberties.

> Our enemies use our freedoms so successfully against us, and I think the real issue of our time will be, as they use these freedoms against us, how will we have to fence them in to prevent them from being completely polluted?

## 26:02 - 28:03 The US Constitutional Design Utilizes Gridlock to Safeguard Against Mass Hysteria

The United States' democratic structure significantly differs from parliamentary democracies in the West. Unlike systems with ceremonial senates and a ruling party's near-monopoly of power, the US features a completely separate upper legislative body with longer terms and a directly elected president. This design inherently establishes a robust separation of powers, ensuring that no single faction can easily dominate the entire government.

This intentional separation creates a system often characterized by gridlock, which, by design, serves as a protective mechanism. It prevents any single group or party from swiftly co-opting governmental activity, thereby safeguarding against mass hysteria moments that could lead to authoritarian shifts, such as fascism. While this design makes the US slow to respond to certain issues, its foundational architecture ensures legitimacy and stability.

The structural differences also underpin varying degrees of freedom. In contrast to parliamentary democracies which may be more susceptible to rapid changes driven by popular sentiment, the US system's inherent slowness and checks and balances are intended to protect individual liberties, including freedom of speech, which is seen as less restricted than in many other societies.

> Parliamentary democracies are more susceptible to being overtaken in these mass hysteria moments into things like fascism, where the gridlock was designed to prevent someone from co-opting the activity and it makes us slow to respond, but we have the overarching architecture is we are fundamentally legitimate.

## 28:03 - 30:03 Modernizing Defense Procurement for Industrial Stockpiles

The current U.S. defense funding system, characterized by continuing resolutions (CRs) and one-year contracts, creates significant challenges for the industrial base. CRs, in particular, prevent new program starts and limit long-term planning, making it difficult for companies to invest and build the necessary stockpiles for national defense. This short-term approach hinders the ability of capitalism to respond effectively to defense needs.

To address these issues, fundamental changes in procurement laws and appropriation methods are required. Implementing multi-year authorities for critical defense articles, similar to how joint strike fighters are handled, would provide manufacturers with the stability and visibility needed to maintain production. This is crucial for items like ordnance, Tomahawks, and 155-millimeter rounds.

Beyond structural changes, reducing political influence over non-negotiable defense requirements is vital. The conflict in Ukraine has underscored the importance of adapting to rapid technological advancements. Commercially viable and inexpensive technologies, such as drones, can quickly become critical instruments of war due to their low cost and mass availability, demonstrating how commercial innovation directly impacts military capabilities.

> The rate of technological change in the commercial world becomes this direct input into the capabilities that you can project for mass.

## 30:03 - 32:04 Commercial Technology Rapidly Reshapes Modern Warfare and Geopolitical Strategy

Commercial viability and the widespread availability of products are fundamentally transforming warfare, enabling mass production and rapid innovation. The commercial sector's influence accelerates the rate of change in conflict far beyond traditional military development cycles.

The evolution of Ukrainian drones perfectly illustrates this shift. In just three years, these drones have undergone approximately fifty iterations, rapidly gaining new capabilities by leveraging accessible commercial supply chains. This allows for the development of advanced military technology using readily available components, challenging the traditional "Top Gun" view of warfare with inexpensive, pervasive solutions for asymmetric conflict.

Separately, analysts like former Australian Prime Minister Kevin Rudd describe Chinese leader Xi Jinping as a significant risk-taker. Rudd believes Xi perceives the integration of Taiwan as the crowning achievement of his life's work, essential for completing the narrative of "imperial China." Taiwan's existence offers a counter-narrative for a Chinese society, making its "fall" a critical objective for Xi, though a potential KMT election victory might influence this trajectory.

> We think of war in this Top Gun style way, and you don't think about something that you could buy at Best Buy as being important into the projection of force, but things that become permissive and inexpensive in a commercial world have these enormously valuable inputs into fighting kind of asymmetric war.

## 32:04 - 34:04 China's non-military strategy for Taiwan and Japan's defense response

The speaker suggests that China may achieve its objectives regarding Taiwan without resorting to military action, aligning with a strategy that avoids direct conflict. This approach bypasses the challenges of difficult terrain and potential international ostracization that a military invasion would entail.

If Taiwan were to be integrated, even through non-military means, it is believed that other countries with historical disputes, particularly Japan, would view this as a precursor to further regional instability. This perceived threat fuels Japan's strong advocacy for enhanced defense capabilities under its new prime minister.

The historical tensions between China and Japan are a significant factor, with concerns that any move on Taiwan would not be an isolated event but could trigger broader escalations. Japan's robust defense posture is a direct response to these escalating geopolitical risks.

> I believe a bullet may never need to be fired in order for China to get what they want.

## 34:04 - 36:04 Key Factors for Neo-Prime Defense Company Success

The true efficacy of defense technology, such as drones, becomes evident only when exercised in real-world contingent environments or through rigorous simulations. This iterative process of deployment and evaluation drives significant improvements, solidifying their role as critical components in modern warfare.

To maintain technological superiority, a strategic reallocation of the vast $1.5 trillion FY27 defense budget is necessary. A significant portion, specifically from the FFRDC budget, should be directed towards industry. This encourages the development and iteration of commercial defense technologies, allowing them to be tested and refined through simulated war scenarios.

Current research and development budgets are too fragmented. A more concerted and coordinated effort is required, alongside continuous reinvestment in emerging power sources. Crucially, Congress needs to implement multi-year funding authorities across the defense sector. The current reliance on continuing resolutions severely harms defense companies, preventing stable investment and undermining their long-term viability, especially when capital markets are not adequately supporting these businesses.

> These continuing resolutions kill industry, and that is something I consistently worry about because we're gonna lose these companies through CRs and through the absence of multi-year authority, because right now the capital markets aren't working for these businesses.

## 36:04 - 38:04 Navigating the Integration of New Defense Technologies

Integrating new defense technologies requires substantial, sustained investment, as private capital markets alone cannot bear the full burden without clear returns. Congress must provide multi-year funding authority and allocate a significant portion of the defense budget for high-risk, high-reward ventures, mirroring the historical investment level of the Manhattan Project.

Beyond funding, the adoption of new "neo-prime" systems is complex. The military operates under a moral imperative to train and equip service members to win, meaning new technologies must be thoroughly simulated, exercised, and integrated into joint warfare doctrine before deployment. A mere "new widget" isn't enough; it requires extensive validation.

While some technological advancements are already in use, such as in targeting and signals intelligence, others like broader force projection outside of drones are still developing. This evolution represents a significant shift from older tactics, like the carpet bombing prevalent in World War II, towards more precise and technologically advanced warfare.

> The promise we make to our GIs, soldiers, sailors, airmen, marines, is that we are gonna train and equip you on these things for the express purpose of giving you the chance to win. It's part of our moral code in the way we train and equip the forces.

## 40:05 - 42:05 The Challenge of Confronting Iran's Regime and Its Incompatible Value System

The discussion explores the possibility of achieving a "win" against the Iranian regime without complete regime change, despite only a small fraction of the population being loyal. A major challenge is confronting a "red Shia culture of martyrdom," which complicates efforts to affect the outcome and requires sustained political will beyond typical political cycles.

The speaker frames the conflict as a "clash of civilizations," asserting that the value system of some cultures, like the "red Shia martyrdom cult," has been hijacked and is fundamentally incompatible with modernity. This incompatibility makes direct confrontation risky but potentially necessary.

There's a significant risk in both intervention and inaction. Prophylactic action, or addressing a threat before it becomes existential, is often unpopular because the immediate clarity of the danger is missing. This is contrasted with America's entry into World War II, which was triggered by the Pearl Harbor attack rather than earlier concerns about Germany.

The speaker warns that the fanaticism of the "red Shia martyrdom cult" is incompatible with humanity's self-preservation, especially if such a group gains access to nuclear weaponry. This underscores the perceived long-term danger of allowing such a value system to accumulate power, despite the unpopularity of early intervention.

> The red Shia martyrdom cult, the fanaticism is incompatible with humanity preserving itself. Can you imagine if that fanaticism got its hands on the ability to project nuclear weaponry?

## 42:05 - 44:05 US foreign policy divides on process versus outcome

A key observation from an ambassador reveals the core divide in US foreign policy: Democrats are often focused on process, while Republicans prioritize outcome. This distinction can be a source of tension between the two political sides but also presents an opportunity for optimal results if both approaches are integrated.

This divergence is evident in how the US handles military contingencies. Since President Truman, presidents have often initiated actions without formal congressional consent, bypassing traditional processes like UN Security Council resolutions or extensive pre-war diplomacy. While this can be seen as an affront by the opposing party, it reflects a willingness to act decisively to achieve a desired outcome.

The Iraq contingency serves as an example where a lack of conventional process was questioned if the intended outcome wasn't met. Over the past 25 years, the US has visibly shifted its approach, moving from attempts to remake environments in its own image, as seen in Gulf War Two, to a more focused effort on remaking them purely in US interests.

Venezuela provides a recent illustration of this shift. Despite no change in the fundamental power structure, the environment is being functionally remade to align with US interests. This pragmatic shift is highlighted by former members of Congress undertaking business trips to Venezuela, a situation that would have been unimaginable just months prior, demonstrating a focus on interest over ideological image.

> Democrats are obsessed with process, and Republicans are obsessed with outcome. That's the challenge between these two sides of the aisle right now.

## 44:05 - 46:06 AI's Role in Spreading Disinformation and Corrupting Decision-Making Models

The conversation shifted to the significant impact of AI, particularly how it can be co-opted to spread sophisticated disinformation. A notable example involves the creation of fake academic papers published on established sites. These papers, though not peer-reviewed, exist in the digital ether and are subsequently consumed by large language models.

Such models, when tested, have been shown to internalize this false information. One instance cited involved a fabricated medical condition posted on an academic website for three months. An AI model later 'diagnosed' a user with this non-existent disease, demonstrating its susceptibility to misinformation.

This highlights a critical danger: if AI models, becoming smarter and integrated into decision-making loops, are fed a foundation of false facts, they could become unreliable. The ability to create an entirely wrong factual basis for these powerful models poses a serious threat, potentially leading to a breakdown of their utility and accuracy.

> Can you imagine if you can create a foundation of fact that is wrong for a model?

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