You are probably the busiest person on the planet. I just wanted to say what an honor it is for us. Secretary esper has been secretary of defense for the past year. He was previously secretary of the army and a very distinguished record of Public Service having served active duty after graduation from west point 10 years and then the reserve for 11 years. We are looking forward to a good conversation. I think you have met the moderator before. He is a mutual friend, dave mccormick, the ceo of bridgewater associates. He also has a distinguished career as undersecretary secretary of the treasury and undersecretary of commerce. Dave and i worked together in the george w. Bush administration in those roles. Dave is also a graduate of west point. Nothing euro secretary esper, but they were at west point at the same point. Dave, i will turn this over to you. Thank you, nick. Secretary esper, thank you for joining us today. It is great to see you. Nick forgot to mention you were born and grew up in western pennsylvania before going to west point where you and i were both born. I know that you have carried that with you throughout your great career. Be ght we were going to i dressed appropriately. I am sorry i am not lined up with you, but we are glad to have you here. I know you prepared remarks that you wanted to start with. Why do i not turn to you and once you have gone through those we can have a conversation . Sure. Thank you, dave and thank you for your kind words. Nick, good to see you again. I am glad to see you both doing well. I would like to say a few things upfront to set the stage and throughout issues for discussion as we go through this. Saying when iy was confirmed a year ago during my confirmation hearing one of the things i made clear was my top priority would be implementing the National Defense strategy. As you and many know that says we are in a era of Great Power Competition, that she competitors are china and russia, in that order, we have secondtier like korea and iran, and the enduring challenge of violent extremist organizations. We have been moving out for 13 months in terms of implementing the nds. Nds says we have three efforts. The first is to bill daley flat and ready force, strengthen our lines and build partners, and effort three is to reform the department and find greater efficiency. I translate that into creating time, money, and manpower to put together toward other parties. What we have done is really flesh out i did this early on with my team. 10 goals that would guide us over the success of months. It is in our Rearview Mirror now. I will list some goals. Review, update, and approve china and russia plans, implement the Immediate Response force and Contingency Response reallocate, reassign, and redeploy forces in the nds, achieve a higher level of sustainable readiness, developing coordinated plan to strengthen allies and build partners, reform and manage the fourth estate, focus the department of defense on china, modernize the force but investing in Game Changing technologies, establish realistic joint wargames and exercises, developed a modern joint fighting concept and doctrine. We have been moving along those 10 objectives. We have made considerable progress. Our goal is to complete many of them by the end of the year and we are on track. One challenge we have faced over the previous seven months is the impact of covid which hit us in january. I have been tracking this since the january. Mid january. The department received its and weitizens from china have implemented this on february 1st. At our high point over 60,000 Service Members and many of the hotspots, particularly the national guard, whether it was medical professionals helping hospitals, to shooting supplies, you name it. I am proud of what the United States military did. During that time i outlined three priorities. Number one, take care of people and families. Number two, and sure can maintain readiness. Number three, support the whole of government effort. We still have medical professionals deployed in texas and california. We also had to deal with civil unrest in the wake of the tragic murder of george floyd. Our Service Members did extremely well in serving their state governors, the guard that is, making sure that americans had the chance to exercise their First Amendment right of freedom of speech and assembly. I have been very proud of our guard in that manner. In the wake of that i pursued three initiatives to address racial discrimination, diversity, and inclusion in the ranks. While the United States military has been a leader dealing with discrimination in the ranks and making sure it is not part and parcel of the force, we are not immune from what is happening. We are taking a number of actions to do that for two reasons. First, it is the right thing to do, but secondly, we need to be able to recruit and retain the best and brightest and make sure they feel respected and have equal opportunities everybody else does. That applies not only for people of color, but for ethnic differences, sex, gender, sexual orientation, you name it. We want to represent the e andcan people we sworn oath to protect. I just want to talk about broader issues and ensure you that while america is focused inward on covid, at the same time we are focused inward and maintaining our National Security capabilities in defending the country and we see that as our top priority. I look forward to a good discussion. Thank you. That covered a lot of waterfront. I thought i might ask you to elaborate on a really defining your political challenge which is obviously the rise of china and how to think about that from a National Security perspective. In recent weeks a number of your colleagues in the administration have made very significant speeches about chinas role in the world. You have talked about reorienting the department toward this strategic competition. I wondered if you might elaborate on what you mean by that, what are the specific things underway, and how do you see that challenge evolving . First, i have been watching the rise of china for many decades. I was a war planner in the 1990s while still in uniform at the pentagon. My first assignment was focused on that. I have seen this overtime in my various roles whether think tanks or capitol hill. Soerved u. S. Commission china has been on this path for some time. We may have a technical thing on our side. Done is turned the university they should focus 50 of the curriculum on china so Senior Officers have a good idea of how china operates, with the decisionmaking processes are, how the parties organized. I have made china the pacing for Armed Services much like you and i would recall during our days of the cold war. We are understanding Better Chinese order of battle. I want to make sure that is taught in our schools. We are trying to expand our language program, but that will be a challenge. Ano not see china as inevitable threat, but we do have to compete and be more vigorous in all domains whether it is diplomatic, informational, political. I have been speaking out since the early days of my tenure. I gave a major speech at the annual think tank event in germany this year. It is a big challenge and we need to face up with it. Our hope is we can get china on the right trajectory where they share our same values. Where they respect International Rules and do not try to alter them. Where they stop doing what they have done to many of our partners around the globe, particularly in the indonesian region, to get their way and play the hegemony. It is a particular challenge. We need to outreach to them, but also recognize we are in a new era. You have spoken a lot about this and one of your priorities was a very ambitious defense reform agenda. As a former defense planner you know the challenges to allocate resources so you are able to deal with the challenges immediately in front of you while also investing in future capabilities would be more aligned with dealing with the asymmetric threats evolving in china and russia. Talk a little bit about that effort and i also read about on the your efforts resources to make sure you were cutting out the fat with your latenight sessions where you went line by line. Talk big picture and then go granular. It is so much about making privatization. Or need to maintain annual growth to make sure we are as ready as we need to be defaced not only the threats today, but future threats. It is the present versus the future. It is what you need to fight today . We have serious challenges if you look at the mid east with regards to iran, north korea clearly is a challenge, but at the same time i have to be thinking about the future. That is my role in so many ways. It is making those tradeoffs on a daily basis. I came into this job over a year ago and we went through the fourth estate, all the 29 plus defense agencies that make up the backbone of the military and found 5. 7 billion that i could put into these National Defense priorities because we always want to go after fat. Sometimes you have to go over a little muscle too. We began a series of command reviews and got about six underway right now reprioritize resources whether it isis troops, money, four times. That is the fundamental thing. How do i make sure i have sufficient resources to compete with china and deter any type of conflict. Third if those failed, i have to be prepared to fight and win. The china competition is not limited. It is a global competition. Multifaceted and requires tough decisions. We are making those as best we can. I cannot hear you, dave. Part of that you talked about is innovation and i wanted to maybe ask you to go deeper on that. Omb,u walk the basement of you probably see some dust on former transformation reform efforts. Some of which have not come to fruition in the way the originators hoped. What makes this one different in your mind and what are the impediments that you see as the secretary to innovation within the department of defense . That is a great question. Moment. T a pivotal you would recall this as well that we were still living off the buildup of the 1980s. The big weapons system of the apache and the abrams and the patriot were the same systems used and upgraded, but that we are still using. We reached a point it was time to make that change across all services. You see everybody doing this whether it is the air force with , threealth bomber services with the f35, the army is moving into directions to upgrade. But the underlying technologies are clear and we are putting a lot of dollars into this. We have 11 modernization priorities to get there including ai, which i think will be a game changer in terms of our ability to maintain overmatched, coupled with robotics and machine learning. Energy,ic, directed quantum physics, biotechnologies, these areas are Game Changers in the future that we have got to put dollars into and are committing to. When i talk to your previous question about reform it is those types of reforms, ending legacy programs, curtailing activities that have a low roi to free up that money. If we are going to continue to dominate the future and win the future, and win in the sense of preserving the global order as it is consistent with our values so that everybody can live insecurity and prosper much as we have done. One of the things that is related to that you and i have talked about a couple of times over the years before you were in this role was culture. The culture of the military services and what you think about the pace of change. If you believe these emerging technologies and pace of change is accelerating, the question comes to mind about culture and whether the culture of our services is appropriately risktaking, entrepreneurial, to be able to adapt. I know you have spoken a bit about the risk of for fear of it that you have seen. How do you see that playing out and how do you imagine we might evolve it if it is a real issue . This kind of gets to the second part of your last question i did not answer. I will address that now. Culture is dominant. It is what drives so much of our behavior in so many ways. You asked what are the obstacles to modernize the force of success. It is the culture of dod which, first of all, we are heavily bureaucratic. You have people protecting their programs, protecting their activities, protecting their staff, and on top of that is the risk aversion of taking risks that should be taken. The big hurdle is the bureaucracy culture. There are legislative obstacles put in place, things we have to do based on federal policy, but those are not the big issues. The big issues are internal to us and our willingness to overcome bureaucracy and that is something we could talk in detail about. When you get down to the services they have unique cultures. Usually it is really good, there is a diversity of culture, and when it comes to war fighting i do not see a risk aversion. Service are willing to take and manage risk where they understand the mission and are willing to act boldly to accomplish it. I am very encouraged from a fighting perspective we are building the right type of leaders and giving them sufficient guidance and coaching an opportunity to grow and learn. It is everything behind them, bureaucracy, the big agencies where we need to give a difficult trip. That means giving people room to fail. They understand why and taking appropriate action. It does not mean people lose their jobs because they took an appropriate risk. Part of that is changing the leadership culture. Incentives, promotions, fit into that as you and i remember from our days in uniform . There was a clear path to being promoted and that was what directed the choices individuals made. How do you see that playing into your decisionmaking process . Again, there are two different types of systems. You have the civilian system and the military on the other. With the military it is fairly structured in terms of a career path, but what we need to do, and i see Services Taking this on i will speak to the army because we were developing at that and secretary mccarthy and the chief of staff continue to develop it but you have to take the less structured approach and less rigidity. It is not an Industrial Age management policy, but a 21st century Talent Management process. You get the people the room to pursue their interests based on their skills, behaviors, as long as it is consistent with army needs and requirements. You do not penalize them for theff track which atte breadthople have in their experiences, if you allow them the room to kind of maneuver outside a traditional career path and go to advanced civil schooling or take an assignment in another department toother service, we need encourage that type of broadening. Thank you. Topics toshift diversity and inclusion which is obviously on the National Consciousness at the moment in a profound way, but also something you have really made a priority. I was struck by a video that came out earlier this spring of senior enlisted leaders and officers talking about their experiences with prejudice in the military. You start your comments by saying the military has been one of the great institutions of equality, but has room for improvement. I wondered if you might give us your assessment of this state of the military today in terms of race and also how you are dealing with whatever gaps there are in the kind of institution we want. That is a great question. It is a profound issue. As i said i think the murder of george floyd was a wakeup call. It brought americans onto the streets to protest this discrimination that many fellow americans, africanamericans, experience. It was a wakeup call for us as well. Immune to are not what is happening in broader society. It is clear because we bring young men and women into the service from all walks of life, all corners of the country, urban, suburban, rural, black, white, asian american, you name it. Thinkpes and i do not what everybody appreciated me personally at least is the depth of sentiment among our Service Members of color about how much the killing of george floyd and the other incidents that preceded and succeeded it had on them and what they were experiencing in the ranks. Within a week or two of that i started going on the road to check out training. Toid this as part of covid see how our recruiting and Training Base was holding up under the stresses of covid. It eventually turned into a listening session as well. I have gone across the United States and abroad listening to Service Members of various diverse groups and you get a true sense of what they have experienced. And the goodtory news, or maybe the bad news, is it is consistent. Regardless of service or location the same type of stories, same experiences. We took ourselves we took it upon ourselves that we had to do better. Leadinghad a history of on these issues and it was time to step up, to really capture this moment. I laid out three initiatives. Number one was to come up with quick action items that we can do now to make a difference and get things moving. I signed that july 14th. July 15th we stood up a defense board for inclusion led by the secretary of the air force. She was joined by the senior listed advisor. A very diverse team and not just in terms of having persons of color and ethnicity, but we also want to get people in different ranks. We have young officers, midgrade officers, because we knew they would own the future. They had to help us and we wanted to be part of that. She is doing a sixmonth sprint to bring me back recommendations in december. The third and longer piece is the Defense Advisory Committee on diversity and inclusion. We will be standing that up probably the end of november, but that will be the enduring, dependent body that will look over time and help us see ourselves and help us make progress on issues of diversity, inclusion, and equal opportunity. It is critical because it is the right thing to do, but secondly, it is important to readiness. If we are going to deploy a ready force, we need americans of all walks and colors, ethnic