Ep 152: Ben Black Runs America's $200B Foreign Investment Fund; Here's His Plan to Counter China & Rebuild American Influence

0:00You were confirmed last fall, Ben, to lead the DFC. The government's international deal team. We had our reauthorization this fall, a$205 billion authorization. Just a little tiny bit of money for you to manage. Tiny bit, tiny bit. We execute on U.S. foreign strategic interests, energy, critical minerals, and technology. We move the needle for the development of our partners and allies. And really more than anything else, we deliver a return for the U.S. taxpayer. This moment in time is unlike any other, certainly in our lifetimes. What's being shaped right now is the future of the next 50 years.

0:46My friend Ben Black is a key figure in the Trump administration. He has$205 billion to invest in our developing allies. Ben runs the DFC, the International Development Finance Corporation. Here's a novel idea. How about let's invest and partner with our allies with money instead of just shoving money out the door to create dependencies and waste everywhere. Ben and his team plan to make money for the American people while cementing our alliances, pushing back on China and making sure the next century is the next great American century. Excited to have my friend Ben Black here with us. Ben is the CEO these days of the International Development Finance Corporation, DFC.

1:21Welcome, Ben. Joe, thanks for having me. Yeah, no, it's great to be here. Before we dive into DFC and your role, tell us a bit about your background. You studied at Penn and Harvard, worked in finance. What were you up to? Yeah, I'd be remiss if I didn't. So I start off at Penn. I was a history major. I actually did a year abroad or at Dartmouth. And before going to grad school, I was at Goldman, kind of traditional finance route. But, you know, as I said, history background and growing up in New York City, I was very much influenced and shaped by my grandparents, particularly my grandfather. I talked about him in my Senate hearing, but he was a veteran of World War II and he served up in the Aleutians as a tail gunner on a B-24.

2:09Tail gunner on a B-24 in Alaska. Yeah. And up in the Aleutians. And so I had no idea what being it, you know, I used to love hearing his old stories, but I didn't quite realize how dangerous being a tail gunner was. It's a very low survival rate for people on that position, right? Incredibly low. So he actually won the flight medal, you know, 30 successful ups, which was a lot rarer than I realized during his lifetime. Um, but, you know, he kind of inspired me a desire to serve my country in some capacity, uh, at some point. And so both American history, as well as doing something for the country was always instilled in me through him.

2:53Obviously required a lot of luck. Was there some skill in surviving in this position as well? Like, like, like you just get shot out. You're dead. Like what, what, what, what keeps you alive? So, you know, there's a great show, which is obviously highly dramatized, called Masters of the Air, which was pretty eye-opening to me. I mean, look, he was a tail gunner, not a pilot. They were in a landing crash at one point, but actually everyone turned out okay. I think a lot of it was luck. Look, up in the illusions was a totally different case. I think learning to layer and not die from the cold was something else altogether unto itself, especially when you're sitting down in a ball turret.

3:33I remember the British gunners had to break the windows and then they had 40, negative 40 degree cold, but that's the only way they could see well enough to like see the planes in the distance to shoot them. Was it, was that similar? I think that was particularly a British plane problem. I think it was British thing. I mean, the way my mother and uncles always phrased it about him was he always stood ready. He wasn't in the battle of the illusions, but where he was stationed, which, you know, I've done some research on and everything. You know, they didn't see direct combat, although they engaged in fire at some point.

4:08Amazing. Well, my grandparents served as well. My wife's grandfather was also a tail gunner, but over in Italy. So I guess that was a different challenge there. To say the least. It's amazing. I guess we're lucky. The people alive now are the grandkids are the ones who's, the rare ones who survived those positions because most people didn't. But being able to speak to them and learn from that greatest generation, I think, has shaped so much of my life unquestionably. And it's something you talk about, and we've talked about this before, but simply appreciating the United States, America, American values.

4:43It was, frankly, run of the mill for all these guys who went in at the age of 18, and they really saved the world. and be partially raised and have your values instilled by those people. It's more GFK asking what you could do for your country versus I think Kamala this week was telling women that you got to ask when I'm going to get mine, which is probably maybe a little different perspective on what we should be telling from our leaders. Isn't that from Jerry Maguire? I know, seriously, that's what she was saying this week. And of course, I think you'd be remiss not to, so you had your grandfather, your father and your family also built one of the great financial organizations in the world, Apollo, that must have shaped you a little bit growing up too.

5:21100%. I mean, look, what was fascinating was just some of the business luminaries I got the opportunity to meet growing up and just being able to be a fly on the wall, listen to how John Malone, Ted Turner, all these different people who built the cable industry, Mike Milken, who I'd go on to work for later, it was the shaping of an era of growth. And it's an interesting thing. I was talking to my father about this the other day because frankly, right now is the largest CapEx boom in America since when he was a young banker and you were building out all the cable and telecom across the country.

6:07and you know a lot of people talk about the lbo business but it was a lot closer to what a lot of you and your friends do in terms of building new businesses and just how it dramatically transformed the lives of everyone in the country i always joke i really appreciate all this capex and the telecom case i got to build my internet companies on top of it and in the ai case i'm going to build my ai companies on top of it hopefully it works out better for the capex investors this time because you know it's definitely needed it worked out for a lot of those guys. Some of them did pretty well. Some of them didn't.

6:37That's very fair. And most recently before DFC, you were the founder and managing partner of Ford and Ross. Tell us about that. Yeah. So actually, so I was at Apollo doing energy and I had actually, so I did the only thing I knew that did that wasn't, you know, your traditional, at least not today, finance path was I also worked as a lawyer at Sullivan and Cromwell. And I was very lucky to have a phenomenal mentor there in Jay Clayton. And so I did a JD MBA at Harvard after I had left Goldman. And then I found myself, I really liked the credit. And while I was at Apollo, I got the benefit being an energy of going through a real restructuring cycle, which most didn't get since the 08, 09 crisis.

7:28And obviously there's a lot else that goes along with that from a pure finance side, being in the energy space, it was completely different. So I started on the desk in 2014 when oil prices after that OPEC meeting went from 80 down into the 30s pretty fast. And you saw a lot of capital markets debt, which was like worth 20 cents on the dollar. And so you're getting a real good business, bad balance sheet type experience. And so the debt and credit side of things and working across the capital structure with my legal background kind of became a hallmark from there of really where I focused. Awesome.

8:12Awesome. There's a lot of fun nuance there to get right. And so you were confirmed last fall, Ben, to lead the DFC. This is a really important organization strategically for the United States. A lot of people don't know about it. What's this mandate? What are you trying to accomplish? Yeah. So it's the United States International Development Finance Corporation, which is a bit of a mouthful, but DFC works. And it was founded in President Trump's first term. And what it really is, is the rump of the old OPIC, which is the Overseas Private Investment Corporation, which started in the early 70s, 1971, I believe, to invest overseas for the US interests.

8:51We can talk about a little of the history, fundamentally, we had our reauthorization this fall, a$205 billion authorization. Just a little tiny bit of money for you to manage. Tiny bit, tiny bit. But fundamentally, we have three tasks. Through the mobilization of private capital, we need to pursue and we do execute on US foreign strategic interests. We move the needle for the development of our partners and allies. And really more than anything else, we deliver a return for the US taxpayer. So you're trying to actually make money for the US taxpayers. So it just shouldn't cost us money, but you're also trying to help our allies, help cement those relationships.

9:36A hundred percent. And really the way we think about it is as the government's international deal team. Our goal is to really drive the American free market systems export all over the globe, because we really believe that that is the engine that drives worldwide goodwill, security, and growth. And you and I actually wrote a piece before the administration started, where we talked a little bit about some of this. I think we called it how to doge foreign aid. So, a lot of the money the US was spending around the world, I guess we talked about how it was, like we'd go to Uganda and we like helps build all this infrastructure and help them a lot.

10:15And then China would come in and like do the minerals deal, right. And take, and take the upside. And so a lot of the foreign aid, A, you would spend money instead of making money and B, you'd like help our adversaries basically in these places. So like, like what's, what's, what's the idea now to how to, how to change that? Like what's the right framework? So I think this is why the DFC is so important because it's investing for these purposes. I I mean, go back to America's founding. I don't remember the part in the history books where we got grants from France and others. Alexander Hamilton honored our debts and it built the greatest free enterprise system the world has ever known.

10:55Yeah. The way you lift people out is you treat them like a partner and you do business with them. You don't just like dump money on them, right? It's an amazing point. And my head of investments has gone overseas to places and has gotten thank yous for being treated like a partner to have expectations set rather than an incredibly paternalistic view that frankly does not create partners, but dependency. I tend to find that people, especially on the left, have this kind of soft bigotry of low expectations where it's paternalistic and you're like, oh, you're dysfunctional. I need to give you money or else you're going to die, as opposed to it actually is better for them.

11:32It seems like we're being rapacious or mean if we're trying to do business with them, but it's actually better for them if we're investing in them, right? It's an interesting thing. And this goes throughout the work of Kahneman and Tversky and everything in terms of behavioral economics. But when people actually have skin in the game, are invested in, and are working hard for something, and it's why we have our partner countries co-invest with us. I think people don't realize like the reason our civilization works is because of property rights, because of markets, accountability, investing for returns.

12:06These are all frameworks that actually, because we have these things, because we believe in them, we've made things work. And I think a lot of our partners that are, a lot of the developing nations that are the most in trouble right now, they don't have those same property rights always. They don't have the same accountability. They don't always, you know, they don't have frameworks where they have that. Is part of the goal to export these values to these places? Well, exporting the free market system, I think you're hitting on it entirely. Because look, every culture is going to have its own values.

12:33There are going to be different cultural mores, but our system, our rule of law, property rights, and that stack, that bundle, as they would say in law school, is so incredibly powerful for doing business, growing wealth for a country, and building better lives for an entire populace. And that's how you have a trusted partner and market to work with. You know, when we think of foreign aid today, for those of us actually reading the articles and paying attention, like when I think of foreign aid, I think of waste and fraud. And, you know, originally we had the Marshall Plan, which was quite successful.

13:08How do we go from the Marshall Plan to like tons of waste and fraud around the world? Like what happened there? So it's a great question. And look, the Marshall Plan, I view as the apogee of a train of evolution through American history that worked incredibly well from Hamilton to Theodore Roosevelt using economic and industrial might to build out our interests to the Marshall Plan. What people don't realize about the Marshall Plan, part of it is this myth has been taken on about pure altruism. And it was incredibly altruistic. But 70 % of the funds that the U.S. sent over to Europe in the Marshall Plan were used to purchase U.S.

13:50goods and services. So 70 % were actually paying us, giving us back basically something. It was a stimulus for us and it hardwired markets for US workers, businesses, and capital. And we had a first call on strategic and critical materials. So look, it's a great question. I think in some ways we were slightly victims of our own success. You go to this period of time after we win the cold war and everyone's into fukuyama's end of history and if you build it just people will automatically convert to our system we let china into the wto we lost all discipline we thought they were going to like convert to our system i guess but like by magic by magic do we feel guilty it feels like there's like some guilt that was driving some of these things it seems like maybe interaction by guilt's a bad thing but we felt guilty and just gave money away in stupid ways.

14:46Like what happened? So I don't think the United States of America felt guilty. I think, look, we have a much different history than some of our allies across the pond. And over that period of time, and we're working on a white paper that talks about this at the DFC just over the course of economic statecraft, there was a system that got built in where, I mean, development is fantastic. It's raising everybody up. It's a rising tide that lifts all boats. This concept of human development that, you know, is frankly, a lot of it's quite regressive. You know, these are all the degrowth people today.

15:30And so there's a whole separate system that came out focused on NGOs and kind of no restrictions, no paying attention. And And we had a lot of lost agencies because we had won the Cold War and we looked inward and we weren't really focused on a plan and we thought things would happen just automatically. It seems like something the market does is that when you make an investment, I assume you're looking for metrics and for results and for things that are going to actually happen. Something about the NGOs, they lost that discipline, right? Like the NGOs were not giving money with iteration towards metrics and towards results and towards outcomes.

16:07Somehow they just started giving lots of money towards things that weren't working. It seems like a different discipline. But I think losing discipline is the right phrase. I mean, there were many early NGOs and things that were done early on where there was a lot of discipline and metrics attached to it. And then there was just a lot of mission drift and slip and less oversight, frankly. And so what the Trump administration represents and where President Trump is so fantastic is he is the most financially astute president we've ever had. And he's really focused on how economics makes the world go round and what it means for not just the exercise of American power, but building out the next century to be another American century.

16:52Just going over the flaws, just a little bit longer. So when we look back, I'm looking at our piece over here that we wrote, and we looked at all these examples. There was lots of money towards improving gender equity in the Mexican workplace or gender equality for climate change opportunities. Or I think there's promoting respect, equity, and belief. There's all these lists of things. And it's one thing that they sound woke, so they're easy to make fun of because they sound kind of ridiculous. But there's something about them that's also because of the way they're designed to sound so woke in virtue signaling that it's almost impossible to create metrics around that, right?

17:26It's like they just lose all discipline just by the nature of what they are. Well, it's also they're small, they're disparate. How are you tracking them all? So remember, we went from$60 billion to$205 billion. And one way of doing that, it's not what we're choosing to do, is you could just have thousands more of tiny investments and good luck tracking that. I mean, we're also doing a whole thing. We're bringing in a lot of data metrics, analytics, following all this because you have to. The other thing is if you look at the course of human history, do you know the single factor that It has brought the most people out of poverty throughout civilization.

18:06I assume something about markets, but what is it? Actually, industrialization. Industrialization, that's fair. And so, when you think about the projects you're going to do, you need the big ones that move the needle for people. I mean, it's the story of America in a lot of ways. Look at the railroads going west and everything. Towns develop alongside railroads. The industrial revolution and the industrialization around that, the outcomes are just so much higher. Exactly. But also, I mean, think about putting the cart before the horse on what you're describing. You're going to build a town or a cooperative somewhere and for some reason that business should work.

18:45I mean, it doesn't really make sense. A business that opens up alongside a railway line. Now that makes sense. So what's the Trump administration's approach? You're helping these places industrialize as well. What does that mean? So I think it's projects that move the needle. So we think about it, look, we're the largest energy exporter in the world, the largest producer of oil and the largest producer of natural gas. So our RE-auth kind of lays the path of what the key sectors to invest in are energy, critical minerals, and technology. We have the right to invest anywhere in the world, no restriction there to block choke points from China and Belt and Road, but also to move the needle for others.

19:30But take energy as a continuum. You go somewhere, you want to build a port where US LNG can be exported to. We need a regas plant there to send it to the country. Maybe we need a critical mineral, lithium, cobalt or something in that country. but mining is incredibly power intensive. That's where that LNG or now that natural gas comes in. And along the way, you can also supply consumer power to villages, to small businesses, large businesses, and you grow an economy. Can this tie in? So for example, there's just like trillions of cubic feet of natural gas we're not using in Alaska. Can this tie into taking those and building an LNG terminal and then sending it to some of our allies?

20:15Is this the kind of thing that might look at? I think that's definitely part of the plan. We can't invest inside the domestic United States, but we work heavily across the interagency. In terms of policy priorities, we work heavily with the White House, the admin, NSC, and state. And then we work a lot with Exum. And John Yubanovich is a close friend and the head there. He's all about exporting stuff from the United States. Export and import as well. Hence Exum. Exactly. Exactly. But part of that though is I like to say like, hey, some of that's working capital and maybe we're long-term investment.

20:54I was just in Japan and we were with a minister there who's in charge of investing hundreds of billions of dollars into the US. Ah, J-BEC. Yeah. And there, that's interesting. I wonder if there's ways to collaborate. They can invest in something here that you can then use to help allies or something like that. I think it's a great point. We call these nexus deals where, and it happens in the Gulf. as well with our partners there where maybe there's a mine or a gas field and we invest in it together and then you look at the processing and that's going to go in the United States. We wouldn't invest there, but different parts of the government would as well as private capital.

21:32That's really a key part of this because if it were just using government dollars, we wouldn't be any different from China and they're seven times the size of us. So you want to have private capital, scale it up and do the things that make sense alongside you? Look, no matter how, and we brought a private sector approach in to the DFC. My goal is to move at the speed of the private sector, but there is nothing like the dynamism and incentives of the private sector. So China is spending over a trillion dollars on its Belt and Road Initiative, which like you said, it's a lot more money. But I guess you're saying we have a much more dynamic and deeper, even private sector than they do, and that's an advantage you have.

22:08And building markets, it's okay. So I went on part of my honeymoon with my wife to Rwanda and remember driving. We did a guerrilla trek and, you know, an amazing country, especially what they went through with their genocide and civil war and how the country has been rebuilt. But, you know, the driver on the way to the guerrilla trek, guys are Americans. We love Americans. this road, everything here was built by the Chinese. We hate the Chinese. I go, but they built you the road. Why would they? They go, yeah, they built our road. They won't pay and they won't use Rwandan workers. They don't eat at the same restaurants or anything like that.

22:53It's purely extractive. It's very similar to the example you made in terms of the critical minerals deal where we'd build a road and then the Chinese would come in and that we wrote in the article. It's very similar there, but it's completely remote. I like to say it's not even M1 capital in monetary terms. And so with the US capital with a full stack, similar to the Marshall Plan, when you build a market, you integrate the entire ecosystem and economic ecosystem. You have a future US buyer of goods and as countries get richer, much more propensity to invest in the United States as well. Because you're coming there with other businesses to ensure you're integrating the businesses into their economy.

23:35Exactly. You're making them like us because you're actually hiring people from there. You're thinking about the positive sum outcome. It's strange that China wouldn't be thinking about positive sum outcome. Why would they get that wrong with that? Because it seems like such a mistake for them on how they build the road. So they've built an interesting machine. And I'm sure you've read some of this. And they've accomplished amazing things within their own country. but it's very much a state capitalist system. And therefore, they're not looking at foreign markets. They exert control over foreign markets through their economic heft.

24:11They're thinking, here's what we need from this for our internal system. So they're coming and they're taking. They're not coming to integrate and be long-term allies. Precisely. And look, we saw this with the rare earth scare last year. And it's kind of how we sort of took our eye off the ball as the United States in the 90s and early 2000s, we used to have the Bureau of Mines that would disseminate processing data and information across to all mining industry people. And we kind of exported that entire industry. And if you go back to Hamilton again, Wealth of Nations, if something is for the defense of the nation, invisible hand doesn't apply.

24:53You need the redundancy. You need the self-reliance in the country. This is where I think a lot of libertarians get confused because I'm very, very liberty-minded. I want things to be as much that way as possible. But for our defensive purposes, there's certain things we have to have here and we can't just like have, if China's doing it cheaper than us, that might be the right market solution, but it's definitely not the right military defense or country solution, right? 100%. And you see this across minerals. You also see it across pharmaceutical APIs as well, which we learned much to our chagrin during COVID.

25:24Are these things where you're going to invest with our allies outside of China that we can trust more? Obviously, we got to bring some things back to the US, but are there ways to use allies to also diversify our supply chains here? 100%. There's nearshoring components. I mean, look, in some parts of the mineral supply chain, if you think about it, and this will be a whole new fun panic coming up. So, sulfuric acid exports have been banned from China, and that's 25 % of the market. That starts May 1st. What is sulfuric acid used for? Sulfuric acid is used often for the processing of rare earths.

25:58It's incredibly important for fertilizer and a whole host of agricultural products. But the example I was going to use here on sulfuric acid is if you think about the processing and movement from raw ore in a rare earth to oxide, which is the powder that is moved on to the metallization process. It's like 5 % of the weight yield. So sometimes building a processing plant and doing the sulfur baths much closer to where the mine is, is much, much cheaper in terms of shipping. And if it's a trusted country and ally, it makes a lot of sense. That's 20 shipping trips versus one. Of course. Of course.