Get rich, quick: Vietnam’s next revolution

0:02The Economist

0:10Hello and welcome to The Intelligence from The Economist. I'm your host, Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world.

0:25America's Secretary of Defense is on a ruthless cleanup mission with the Army, nixing kit at a prodigious rate and clearing out the highest ranks. Our defense editor says that, perhaps unsurprisingly, that comes with big risks. And Ed Smiley spent decades at NASA, working on the most high-tech tech of the early spacefaring age. But our obituaries editor looks back at what made him famous, a life-threatening problem and the most low-tech solution imaginable.

1:01First up, though.

1:10Vietnam has enjoyed one of Asia's greatest economic success stories. It opened up to the world in the late 1980s and has become a manufacturing powerhouse in industries from sneakers to smartphones. But Thô Lam, Vietnam's new leader, talks sharply of challenges ahead.

1:38Earlier this month, he rang a now familiar note of urgency, saying Vietnam cannot rest on its laurels, it cannot delay. What he's in such a hurry for amounts to the most sweeping economic overhaul since the country embraced the open market four decades ago. tolam wants to make vietnam a rich world country by 2045 that's a hard thing to do many countries have tried and they failed particularly in southeast asia ethan wu is our asia business and finance editor and a co-host of money talks our weekly show on business and finance so to do that what tolam needs to do is transform the entire economic model that has pulled Vietnam out of poverty in the last few decades.

2:23If he succeeds, he could propel 100 million Vietnamese people into the developed world. And if he fails, he could get stuck as just one more Southeast Asian middle-income trap story where you're stuck with low skills, low-paying work, and an inability to move up the economic ladder. And the stakes are high because this is potentially Vietnam's only chance to get rich. And Tholam, he sees this clearly, and he has a plan to get there. Well, before we get into the plan, what kind of leader is Tholam? Tholam's past is, I think to put it politely, a checkered one. He served eight years as the head of the Ministry of Public Security, which is Vietnam's quite terrifying police and security service.

3:08He's been in office since last August, and he rose to be general secretary of the Vietnamese Communist Party through what appeared to be an internal power struggle. where he used an anti-corruption purge called Blazing Furnace to disempower rivals and to empower himself. And now that he's secured his grip over the reins of power in Vietnam, Tolan sees himself as a historical figure coming at a pivot point in Vietnamese history. And we saw that vision of history very clearly during his speech last month at the 50th anniversary of the end of the Vietnam War, which is a pivotal symbolic date in Vietnam.

3:59What he said is that Vietnam is at the threshold of a new historic era of national advancement, what Tholam calls an era of national rise, and that what Vietnam aspires to do is stand side by side with other great powers and deliver a Vietnam 10 times greater than it is today. And to your mind, this is not just rhetoric. You say he has a plan. Yes, he both has a plan and he's moved quickly to begin executing it. He's targeting 8 % growth this year, double digit growth by 2030. He's trying to boost Vietnamese R &D. He's trying to empower the private sector. He's doing a very ambitious streamlining of the bureaucracy.

4:35So it's clear that Tholong believes Vietnam is running out of time to get rich. And if it wants to do so, it's got to do it now. Why that sense of urgency, though? Why is this the moment? Well, Jason, I think to understand that we have to go back a little bit in Vietnamese history. The business model the country relies on now was born in 1986 with a market opening reform called Doi Moi. This came after a decade of failed collectivization after the Vietnam War. And Doi Moi, it opened the economy, it legalized private enterprise, it welcomed in foreign investors. And what developed over the coming decades was a really appealing manufacturing base for foreign companies to come in.

5:16Vietnam had political stability as a one-party state. It had cheap labor. It had proximity to other East Asian manufacturing giants like China and South Korea. And companies like Samsung, like Nike, like Intel came to Vietnam as a base for their manufacturing assembly operations. This trend was supercharged by Donald Trump's first trade war with China, which convinced a lot of companies, hey, it's too risky to have all our operations in China. We need to add another link in the chain. Vietnam ended up being where a lot of those companies went. But that manufacturing for export model reliance on all these multinational giants like Samsung, the growth engine is running out of steam.

5:55And there's a couple reasons for that. One is that Vietnam's low-wage advantage, it's not as big as it used to be. Labor costs have risen rapidly as the pool of surplus labor within Vietnam has started to run out. And now Donald Trump's proposed 46 % tariffs on Vietnam threaten its most important export market. America makes up 30 % of Vietnam's exports, about double the second biggest export destination. And on top of that, you've got demographic challenges and environmental challenges. On the demography side, Vietnam's population isn't growing as fast as it used to be. And in the 2030s, we could see the working age labor force actually begin to shrink.

6:35On the environmental side, industrialization has come at a major expense to Vietnam's waterways. And the country, which has a very long coastline, it's highly exposed to climate change, to rising sea levels, and to the risk of flooding. So, Tholam, altogether, is right to be worried. And he's right to think that the model that's made Vietnam so successful in the past 40 or 50 years, that that's taken poverty from 50 percent to the single digits, that that's now running out of road. But let's get into the meat of how he intends to upend the model. What needs to be done? Yes. So Tholam has identified several key things that need fixing.

7:12And one is that the Vietnamese private sector is too concentrated around certain pockets, certain islands of activity. Foreign manufacturers come in, they assemble products in Vietnam, and they export them elsewhere. But the issue is that those pockets of activity don't spill over into the rest of the economy. Very few Vietnamese smaller businesses act as suppliers to those multinational manufacturers. While Tholam transforms that model, he's got to do so while walking a very delicate geopolitical balance. So again, America is Vietnam's number one export market, but many of the inputs into Vietnamese production come from China.

7:51If Donald Trump is calling Tholam and asking him to eliminate China from the Vietnamese supply chain, there's not an easy way for Vietnam to do that. And if Donald Trump uses tariffs as the way to try to induce Vietnam to crack down on China, it puts them in a no-win situation. And then lastly, TOLAM envisages an innovation economy, one where research and development is the center of the model. But one barrier to that is the state's grip on Vietnamese society. Vietnamese universities are not entirely free. They're subject to political meddling, to the setting of curricula. The Vietnamese internet is censored.

8:27Vietnamese state-owned companies dominate important sectors of society. And each of these individual areas, one could make an argument for or against. But put together, you have a picture of a state unwilling to relinquish its grip on society, but one that wants a dynamic and free society that can innovate. And those things are just in tension with each other. It seems like this plan is enormous in scope and has geopolitical, has ideological elements. How likely is all of this to succeed in Toto? Well, for now, politically, Tolum has a pretty strong position. He's installed political allies in key positions to show up his support.

9:04and he has several months to make drastic changes without too much pushback yet. But there is an upcoming Communist Party conference in January 2026, where Tolham is going to seek a second term, a full term. And this is going to be a test, right? As Tolham is shrinking the bureaucracy, as he's trying to invigorate the private sector, vested interests are being challenged. And at that party conference, they may make their displeasure known. And so I think the big picture, Jason, is that Tolham has come into office in just a few months and shown a really keen understanding of a difficult problem, which I can say reporting on Southeast Asia is quite rare.

9:44But the task in front of him is absolutely enormous. Time is limited. And Tolham has not yet shown that he's willing to complete the task. Ethan, thanks very much for joining us. Thanks, Jason, for having me.

10:14Stopping doing things is always a challenge. I think everybody has that challenge, whether it's in your personal life or anywhere else. When you're the chief of staff of the U.S. Army, with nearly half a million active-duty troops, that takes on a whole new level of importance. We know that the character war is changing. It's changing very rapidly. And we know that we're going to have to do the same things inside the U.S. Army to make sure that we're staying ahead of our adversaries. When I spoke to General Randy George recently, he told me about some of the big changes underway in the U.S. Army today.

10:49If they're realized, I think they might be some of the biggest since the U.S. Army's post-Vietnam reforms of the 1980s. Shoshang Joshi is our defense editor. There's a lot of slimming down. A thousand staff positions are being cut from U.S. Army headquarters, with orders to reduce the number of four-star generals and some officers as well. And the change doesn't stop there. The Army is also cutting a lot of kit. We've got to move forward and get rid of those systems that we know we don't need. So, Zhejiang, talk us through it. Is this a level of change that we should expect to see with the new administration or something beyond that?

11:31I think it's a mix of things, Jason. Pete Hegseth, the U.S. Defense Secretary, has ordered the U.S. Army to make these big changes in a memo. And he's ordering changes to the size of the army, the shape of the army, the purpose of the army. And if you look at that memo, it sets two really clear priorities. One of them is defending the homeland. So that's things like defending a southern border from threats arising from migration. And the other is deterring China in the Pacific. And when you say changing size and shape, what do you mean by that? There's a lot of other stuff as well. So there's military jargon.

12:09The memo says that the U.S. Army, its most important task is to achieve electromagnetic and air littoral dominance by 2027. Electromagnetic dominance means you have to be able to outjam the enemy. You have to jam their drones. You have to protect your own systems. What does the air littoral mean? Well, it's not the high altitude areas where fighter jets and military aircraft have traditionally moved around. It's the bit just above us where drones have come to play this outsized role. As we see in many, many Western armies, there's also a big AI element to all of this. The more data-centric we are, the more you have the ability to apply AI across all the warfighting functions to help you solve problems.

12:51And then finally, and I think this is in some ways the most interesting bit, the US army has long been very keen to get rid of certain things that it says actually wouldn't necessarily be optimal or even survivable in a conflict with Russia or China. And in the face of really considerable resistance, they have been able to do this now. Coming at this from the outside, I guess the question is, what's wrong with the stuff that they got? Why do they have to get rid of things and get new things? There's nothing inherently wrong with it. Look at the example of the Humvee, this big hulking military vehicle that would be very familiar to people who have served in Iraq and Afghanistan.

13:31The problem is it doesn't necessarily fit with the way America wants to fight today. I think there are also then issues with weapons that have been procured very recently, but they don't fit into the new vision. So, for example, take the M10 light tank. That only came into service last year. This is a very bold move by the army to say, actually, we don't need any more of these. And then part of this is just freeing up money, freeing up space, freeing up logistics to be able to do things differently. There's also the sense that you're trying to build a very different type of military force. It's a lighter force.

14:07It's a more mobile force. And it may have less protection, less weight, less firepower on paper. But the idea is, if you integrate software, if you integrate new types of weapons, that can do the same thing differently, it should be more effective on the battlefield. But it is worth asking whether you reckon the American military here is just falling for buzzwords and imagining that drones and AI can solve all of their tactical needs. I think that's exactly the critique. Patrick Donohoe, who was a major general till 2022, he says, look, these M10 light tanks, they were critical to America's future brigade combat teams to have enough firepower on the battlefield.

14:45And he says there's too much emphasis on technology, too much emphasis on concepts that he says collapse under contact. When I put some of this to General George, he said, actually, that's not the case. And to prove that, look at the exercises we have been doing with these new formations and the proof is in the results. We just had a brigade that went through actually over in Europe. That brigade 310, 3rd Brigade 10th Mountain was 300 % more effective at lethal targeting with drones, loitering munitions. The point here is you don't need to do things the same way. If you have drone swarms, the army says, they can do the job of attacking targets that would once have required a very, very expensive, crude attack helicopter, which is much more vulnerable.

15:33You mentioned early on that the army is not only making changes to its stuff, but also to its staff. There's a lot of stuff going on with personnel. Pete Hexeth has ordered the military to make cuts. the ratio of generals to troops, to active duty troops, has basically risen over the last 50, 60 years or so. By the time you get up to becoming a general officer, I think you have to be a generalist and understand how all of our formations are working. And I did ask General George, look, what happens then if you're cutting these senior positions? Are you going to have a whole bunch of angry mid-level officers who are not going to get nice shiny stars on their shoulders?

16:11And he said, that's really not the point. The point is more devolution, more delegation to lower levels. I think the question some will ask is, is there a risk that if you're going to fire a bunch of generals or completely shake up the top ranks, is there a risk that this process becomes quite politicized by an administration which has really strong and quite political views on who should be leading the Pentagon? And I suppose the effects of that, the ultimate efficacy of the army itself, well, it will be tested on the battlefield. I asked General George, how are we going to judge whether these reforms are successful?

16:48What's more important, actually, than anything that you would talk to me about is it's our formation. You know, that's who I really feel accountable to. And by formation, he means the units, the brigades, the people in the field who will actually have to do the combat, not the senior leaders in the Pentagon, not people in Congress, not the White House. So when I go out to American commands around the world with a US army presence, that's the question I'm going to be asking. Are these reforms making you better capable of fighting with Russia or China in the next 10 years in the final instance? That ultimately is the only thing that really matters.

17:31Shoshong, thanks very much for your time. Thanks very much for having me, Jason.

17:49There seems to be nothing that duct tape can't do. Anne Rowe is The Economist's obituaries editor. It can mend a shoe, it can lag a pipe, it can pin a bit of bunting to a corner, it can give a book a new spine, and it can even remove warts, apparently even more efficiently than getting them frozen away. This is Apollo Saturn launch control. We're at T-minus one hour, 29 minutes, 57 seconds and counting. Ed Smiley became very famous for his use of duct tape. He even won the Presidential Medal of Freedom for himself and his team and he earned a mention from Richard Nixon himself. He was a great fan of the stuff.

18:39Born in rural Mississippi, he went by two principles in his life. If a thing was not moving when it was supposed to, you apply WG40. And if a thing was moving when it wasn't meant to, you put on the duct tape. When he found on the stowage list that there was tape there and knew it was duct tape, He understood that he was home free. He could solve any problem, no matter how big. And the problem he had to face that day was an extraordinary one. This is Houston, say again, please. I don't know what it was. You want to look at it? Yes. Houston, we've had a problem. Roger, we're copying it. That'll be beautiful.

19:27In effect, he had to rescue a three-man crew. who were 200 ,000 miles away from Earth, going towards the moon on the Apollo 13 mission. An oxygen tank on board the craft had exploded. The second one was also leaking, and the men had to get out of the command module, move over to the lunar module where there was some oxygen. The problem with that was that the carbon scrubbers in the lunar module, which took the toxic gases away when they breathed them out could only handle two men breathing in the module. They couldn't take three and eventually if they had to stay there for three days or more on this long mission they would all die.

20:18So some way had to be found to transfer the carbon scrubbers from the command module into the lunar module. The command module couldn't be used at all because because it had to be shut down to conserve power for re-entry. So what Ed Smiley had to do was to find out how he could somehow bring the oxygen into the lunar module and save the men. We had a pretty large bank associated with the caution and warning there. And if I recall, BP was the one that had an amp spike on it once before. He thought at first he could just bring the carbon scrubbers from the command module. But the problem was that those were not compatible with the ones on the lunar module.

21:09They were cube in shape. And the ones on the lunar module were cylindrical. They couldn't just replace each other or be interchangeable or even easily substituted. So he had to work out what else was on the stowage list. all the equipment that was on the craft, how he could find bits and pieces that he could cobble together to make a contraption which could take the oxygen between these incompatible carbon scrubbers. It always sounds extremely technical, but it was mended in a rather un-technical way. He found plastic bags. He found hoses that went on the spacesuits. He found cardboard, which was the cover of the flight plan.

21:55And a sock came into it somehow, generally helped the insulating of the parts. He put those all together with duct tape. At least he did not do it himself. He had to read out the instructions of how to do it to Jack Swigert, who was one of the astronauts. Swigert put the thing together and amazingly, the oxygen started to flow through it into the lunar module. The key to the whole thing was that it was held rigidly by duct tape. It worked beautifully. Eventually, the mission had to be aborted, but they splashed out safely into the southern Pacific. And the whole country rejoiced. Hello, Doctor, this is Recovery.

22:46We have served you on RCS. When Nixon talked about it, he said it was a jerry-built operation. That was quite a good description. Ed Smiley himself agreed with that. He thought any first-year college student could have done it. It was quite straightforward in his view. The main advice he would give anybody was that they shouldn't take individual credit for something that had actually involved a lot of teamwork. he reckoned that there were at least 60 people guys in the back room as he referred to them who had come up with all the different ideas for how his contraption would work. It wasn't just him by any means.

23:32He had organised them. But his real contribution was simply to notice that there was duct tape on board the craft that it was there on the stowage list. and he had believed fundamentally that duct tape could mend anything.

23:56Anne Rowe on Ed Smiley, who's died aged 95.

24:12That's all for this episode of The Intelligence, The show's editors are Chris Impey and Jat Gill. Our deputy editor is John Joe Devlin, and our sound designer is Will Rowe. Our audio correspondent is Sarah Larniuk. Our senior creative producer is William Warren, and our senior producer is Rory Galloway. Our producers are Henrietta McFarlane, Benji Guy, and Jonathan Day, with extra production help this week from Eleanor Sly. Tomorrow on The Weekend Intelligence, it's the second episode of the new season of Boss Class, our series on how to be a better manager presenter ideator taker of it offline put a pin in it you get the idea it's as fun as it is useful see you there