A significant paradox emerged from Norway's ethical guidelines: its sovereign fund was prohibited from investing in defense companies like Lockheed Martin, even while the Norwegian government was purchasing their F-35s for its own security. The war in Ukraine made this contradiction untenable, forcing a policy review.

Anthropic's attempt to impose ethical constraints on a Pentagon contract was naive. The government, as the state, holds ultimate power and will not allow a private company to dictate terms of national defense. This clash serves as a lesson that a state's authority will always supersede corporate principles in matters of war.

Tech companies that refuse to work with the military are not taking a morally neutral position. They are making a moral choice to withhold technology that could increase precision, reduce civilian casualties, and protect service members. This abstention has real-world ethical consequences.

The defense tech space is crowded with high-valuation weapons startups. A savvier strategy is to invest in less-hyped, non-obvious infrastructure opportunities—like materials science or advanced manufacturing—that are still critical to national security.

A cynical but practical strategy for retail investors is to recognize that wars enrich publicly traded defense contractors. By owning shares in these same companies, individuals can participate in the financial upside created by geopolitical conflict, effectively hedging against the system.

Investing in a hypersonic weapons company, once a career-ending move in Silicon Valley, is now seen as a crucial act of deterrence. This rapid cultural reversal, catalyzed by geopolitical events, signifies a profound sea change in the tech industry's values and its relationship with national security.

As tech and defense increasingly merge, simple ESG divestment rules become unworkable. The rationale for divesting from a company like Caterpillar due to a small fraction of its products being misused would, if applied consistently, force divestment from major tech companies that are essential to a diversified global portfolio.

Creating a successful sovereign fund hinges on three politically difficult choices: establishing a rule for how much revenue to save (Norway chose 100%), a strict rule for withdrawals (Norway spends only the ~3% real return), and the investment strategy (Norway embraced equities). These were not obvious or popular decisions at the time.

To create a successful sovereign wealth fund, a nation must make three key political choices: how much revenue to save, how much of the returns to spend, and where to invest the capital. These foundational decisions were all politically controversial but crucial for Norway's long-term success.