Hale Strategic 3 on 3 Monthly Economic Report: Nov 2026
The November edition of Hale Strategic's 3 on 3 examines a growing paradox: the United States possesses extraordinary military, economic and technological strength, yet struggles to coordinate the resources needed for national preparedness. From cybersecurity threats and electricity infrastructure to the challenge of rebuilding American manufacturing, economic security increasingly depends on institutions working together rather than at cross purposes. As governments prepare for an era of prolonged strategic competition, can democracies organize themselves effectively before a crisis forces them to?
The Midterm Elections Will Not Change the Drive Toward Economic Security
The November 3 midterm elections may alter the balance of political power in Washington, but they are unlikely to reverse one of the most consequential shifts in US economic policy: the drive to rebuild America’s industrial capacity and reduce strategic dependencies. There is substantial bipartisan support for strengthening domestic manufacturing, critical supply chains, energy infrastructure and technological leadership that will withstand any electoral shifts. The parties may disagree over the means, but the underlying direction is likely to persist.
The United States possesses arguably the world’s most formidable military, yet military superiority alone cannot guarantee economic security. The country depends on an intricate network of civilian infrastructure, private enterprises, government agencies and local communities, many of which operate independently and sometimes at cross purposes.
This is not uniquely an American problem. Poland, protected by NATO’s collective-defense commitment, has embarked on an ambitious civil-defense program, distributing emergency guidance to households and approving approximately $26 billion in civilian preparedness spending over five years. Yet its constitutional crisis, which escalated dramatically on October 30, challenges the familiar assumption that an external threat necessarily unites a country. This reveals a striking paradox. Poland and the United States are relatively strong economic performers, with substantial resources and formidable military protection. Yet even the combination of economic strength and military power does not automatically translate into the ability to organize domestic resources toward common national objectives.
What unites our three themes of national security regulation, electricity infrastructure and reindustrialization? The blue glow of a laptop in the hands of a bad actor, whether supported by a government or acting independently. A cyberattack can disable industrial equipment, interrupt essential services or compromise military logistics without a shot being fired. The vulnerabilities of a modern economy extend through the digital networks connecting virtually everything we produce and depend upon.The question is not simply whether we possess the resources to defend ourselves, but whether we can coordinate the institutions, industries and technologies necessary to sustain ourselves over the longer term.
THREE THINGS TO KNOW
1. National-Security Regulation Is Becoming Industrial Strategy
The Federal Communications Commission offers a revealing example of how national security concerns are reshaping civilian commerce. Its Covered List, originally focused largely on telecommunications security, has expanded to include foreign-produced drones, routers, connected power inverters and advanced robotic devices. These restrictions primarily affect new equipment authorizations rather than imposing blanket prohibitions on previously approved products. Nevertheless, they increasingly require manufacturers, importers and equipment distributors to examine where equipment is produced, who controls its software and whether it meets evolving security standards. Despite this dramatic expansion of its powers, the FCC currently has only 1300 employees.
The concern is not hypothetical. Connected industrial equipment can create vulnerabilities in factories, electricity networks and communications systems. On October 29, reports emerged that the Pentagon was investigating suspected cyber interference with refrigeration equipment at several military commissaries. The cause had not been established, but the investigation illustrates how even ordinary commercial technology may create vulnerabilities in military support systems, that are seen as more secure than similar domestic operations.
Security regulation is therefore becoming an instrument of industrial strategy. Yet the agencies responsible for restricting potentially vulnerable technologies may inadvertently complicate the domestic production they are trying to protect. Qualified replacement equipment can be costly or difficult to obtain, while the cumulative expense of compliance has not yet been examined. It is however likely to add friction to supply chains, even as they attempt to reshore.
The challenge is to strengthen security without creating regulatory barriers that weaken the industrial capacity on which national security depends.
2. Electricity Is Becoming Strategic Infrastructure
AI data centers have turned electricity into a strategic economic resource. Computing facilities, advanced factories, military installations and households increasingly compete for the same generation and transmission infrastructure. In April, the Trump Administration invoked the Defense Production Act to identify essential grid equipment and associated supply chains as national-defense priorities. On October 16, the Department of Energy announced up to $50 million in proposed support for a transmission project in Virginia and West Virginia that could add approximately 290 megawatts of delivery capacity.
But the constraints are not simply budgetary. Permitting and local opposition can determine whether projects proceed. Technology companies want rapid access to reliable electricity. Cybersecurity introduces another dimension. An increasingly connected grid may be more efficient and flexible, but it also requires protection against unauthorized access and malicious interference.
The United States possesses the capital and expertise needed to expand both energy and computing capacity dramatically. But financial resources cannot resolve disagreements over where infrastructure should be built, who should pay for it, and how benefits should be shared.
The capacity to build is not necessarily the same as the political capacity to work together.
3. Reindustrialization Requires Knowledge, Not Just Factories
Rebuilding America’s industrial base requires more than constructing factories or purchasing equipment. Over decades of globalization, manufacturing expertise migrated along with production, and evolved dramatically in China's production ecosystem. Engineers, machine-tool specialists, technicians and suppliers developed knowledge in situ that is difficult to document and even harder to recreate.
In an October 27 article, Francis Bassolino and John Dwyer ask whether America outsourced not just manufacturing but the engineering expertise required to manufacture independently. Their distinction is important: a company may manufacture overseas at first because it is economical and less constrained by regulations, but may be forced to later because it no longer possesses the capability to do otherwise.
The defense industrial base illustrates the challenge. A July 2026 CSIS assessment by Jerry McGinn and A.J. Dilts finds meaningful progress in attracting investment and new suppliers, but gaps between spending commitments and the ability to sustain production during a prolonged conflict.
Other countries offer lessons. South Korea has maintained a substantial defense manufacturing ecosystem. Ukraine has demonstrated remarkable industrial adaptation under wartime pressure. Finland provides a particularly instructive example of preparedness before war.
Finland’s comprehensive-security approach brings government, industry and civil society together through established networks of cooperation. Approximately 1,500 critical businesses participate in preparedness arrangements covering essential sectors. Its experience suggests that effective mobilization need not require the comprehensive controls of a wartime economy.
The essential investment is not simply in production facilities, but in the knowledge, relationships and institutions that allow an economy to respond, when circumstances demand it, to provide critical goods and services.
THREE QUESTIONS TO ASK
1. Can national-security regulation strengthen resilience without undermining the industrial capacity it is meant to protect?
Who is measuring the cumulative cost of compliance, supplier substitution and delayed AI investment? Are security agencies coordinating their actions with industrial policymakers, and do they have the resources they need to do the job?
2. Can the United States coordinate the infrastructure investments required for AI leadership?
How can technology companies, utilities, regulators and communities reconcile competing interests over electricity, location and financing before infrastructure bottlenecks constrain growth?
3. Can democratic societies prepare effectively for a prolonged strategic confrontation without adopting the centralized powers of a wartime economy?
What can the United States learn from Finland’s institutionalized cooperation, South Korea’s manufacturing capabilities, and Ukraine’s wartime adaptation? Are we placing too much confidence in military superiority and too little emphasis on civilian resilience?
THREE ARTICLES YOU SHOULD READ
1. Loyaan Egal and colleagues | Morgan Lewis | August 3, 2026
An analysis of how expanding FCC national-security restrictions affect equipment manufacturers, energy developers and industrial supply chains. It highlights both the security rationale and the complexity of implementing the new requirements.
2. Jerry McGinn and A.J. Dilts | CSIS | July 6, 2026
An assessment of US defense industrial capacity and the gap between increasing investment and the ability to sustain production through a prolonged conflict.
3. Francis Bassolino and John Dwyer | Global Trade Magazine | October 27, 2026
A compelling examination of the specialized knowledge and production expertise that may have been lost through decades of offshoring.
THE LARGER ECONOMIC CHOICE
Military preparedness is not simply a matter of spending more on armaments. NATO’s September 2026 Resilience Baseline Requirementsrecognize the need for reliable energy, functioning communications, secure supply chains and coordinated civilian-military planning. Perhaps the greatest obstacle to strategic preparedness is not a shortage of resources, but the difficulty of coordinating them. The challenge is to develop the institutions, productive capabilities and relationships needed for collective action before a crisis forces the issue. The capacity to build is not necessarily the capacity to act together.
