Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
Speaker 2: and this is Trumpnomics, the podcast that looks at the
Speaker 2: economic world of Donald Trump, how he's already shaking up
Speaker 2: the global economy and what on earth is going to
Speaker 2: happen next. This week, we have NATO leaders, donald Trump
Speaker 2: among them, gathering in Turkey for what could be one
Speaker 2: of the alliance's more consequential summits. I'm recording on Tuesday morning,
Speaker 2: US time, and President Donald Trump has already arrived in Anchoror.
Speaker 2: He's expected to meet with the Turkish president there and
Speaker 2: other leaders. And the focus of these meetings recently, particularly
Speaker 2: under President Trump, has tended to be money. The constant
Speaker 2: and reasonable refriras from the US being that Europe needs
Speaker 2: to spend more on confronting the risks at their borders
Speaker 2: and shouldn't continue to rely only on the security blanket
Speaker 2: of the US. But it's not just NATO. Defense spending
Speaker 2: is ramping up all over the world in a new
Speaker 2: global arms race that could look and feel very different
Speaker 2: from the last one. For the first time that's the
Speaker 2: Cold War. Many countries are aiming to acquire nuclear weapons,
Speaker 2: or at least look like they might want to, and
Speaker 2: the guardrails previously constraining that proliferation have more or less
Speaker 2: fallen away. We're also seeing very dramatically how drones and
Speaker 2: AI have transformed the battlefield in Ukraine and Iran, and
Speaker 2: that has countries trying to beat their rivals to the
Speaker 2: next generation of hypersonic weapons and other things. So all
Speaker 2: of this, I think could raise big questions not just
Speaker 2: about the conduct of future wars, but also given the
Speaker 2: amounts involved shape parts of our economy. So what are
Speaker 2: the key features of this new arms race and what's
Speaker 2: it going to mean for the global economy of governments
Speaker 2: one after the other make military tech one of their
Speaker 2: biggest investment priorities. Becker Wasser is the Defense lead for
Speaker 2: Bloomberg Economics. Previously, she led studies and wargames for the
Speaker 2: US Department of Defense at the Center for a New
Speaker 2: American Security and that the RAND Corporation. Becker has also
Speaker 2: been a staff member on a congressionally appointed Committee on
Speaker 2: the National Defense Strategy. Becker, welcome back to Trumpennomics.
Speaker 1: Yeah, thanks for having me.
Speaker 2: And Jerry Doyle is Global Defense editor on the news
Speaker 2: side for Bloomberg News. Jerry, thanks for coming, Thanks for
Speaker 2: having me. Jerry, just tell us what are people buying
Speaker 2: or what are government's buying and why is so much
Speaker 2: of it happening right now.
Speaker 3: Well, so much of this investment in defense technology kind
Speaker 3: of started with the Russian invasion of Ukraine. That's sort
Speaker 3: of urgency to the whole situation, not just in Europe
Speaker 3: but globally, as countries started to quickly realize that they
Speaker 3: might have underinvested since the end of the Cold War.
Speaker 3: So that led a lot of country to start buying
Speaker 3: a lot of the traditional things that you expect to
Speaker 3: see on a battlefield, the tanks, the planes, missiles, artillery
Speaker 3: with a huge priority. And now we've sort of move
Speaker 3: past that and started to look at what is going
Speaker 3: to be the technology that's going to dominate the future
Speaker 3: battlefield for decades. During the Cold War, you saw that
Speaker 3: manifest itself. That arms race manifests itself in terms of
Speaker 3: nuclear weapons, not just the total stockpile sizes, but you know,
Speaker 3: strange novel waves of delivering them, different effects that you
Speaker 3: can create with with nuclear weapons. And this current arms
Speaker 3: race that we're seeing right now is not about that
Speaker 3: it's not about, you know, being able to deliver megatons
Speaker 3: with the death onto a city. It's sort of more subtle.
Speaker 3: It's trying to find ways to give yourself an advantage
Speaker 3: in the future, doing things like investment drones for different
Speaker 3: types of things, for defense, for offense, for surveillance, the
Speaker 3: militarization of space, trying to figure out ways to protect
Speaker 3: your satellites in orbit, trying to find ways to give
Speaker 3: your military an advantage with the things that you place
Speaker 3: in orbit. And then hypersonic weapons, which are sort of
Speaker 3: a more traditional means of destruction but with a novel
Speaker 3: twist of being able to maneuverate extremely high feeds, avoid
Speaker 3: air defenses and so on. And we've seen that, and
Speaker 3: we've seen the drones sort of in practice happening on
Speaker 3: battlefield right now, and it's about trying to figure out
Speaker 3: a way to find that, trying to figure out ways
Speaker 3: to improve and apply these things on a large scale.
Speaker 1: I think Jerry rays is something that's really interesting, and
Speaker 1: it's using all of these technologies to gain an advantage.
Speaker 1: But what does that look like? And I think here
Speaker 1: there's a few things. There's the decision advantage. Who can
Speaker 1: make decisions faster and therefore gain the initiative, and that's
Speaker 1: where things like AI enabled technologies come in. But you
Speaker 1: also have this idea of mass, who can put more
Speaker 1: on the battlefield at any given time to overwhelm defenses,
Speaker 1: to overwhelm your adversary, and that's where you see things
Speaker 1: like low cost drones and lower cost missiles come in.
Speaker 1: And then I think the last area of advantage is
Speaker 1: this idea of cost. Who can do that cheapest? And
Speaker 1: that's where some of these more traditional weapons systems, these
Speaker 1: higher end missiles, hypersonics space, that's all very expensive. And
Speaker 1: that's why you see a lot of governments and a
Speaker 1: lot of militaries going all in on AI and all
Speaker 1: in on drones because they think that it can get
Speaker 1: them the best effect for the cheapest bang on the buck.
Speaker 1: But just on their own, drones aren't going to be
Speaker 1: the solution to all problems, and I think sometimes we
Speaker 1: do see a lot of militaries, particularly those that either
Speaker 1: have manpower constraint like Ukraine, or those who have fiscal
Speaker 1: constraints like arguably some countries in Europe, going all in
Speaker 1: on drones to try and make up for those sharkfalls.
Speaker 3: It's absolutely true that you know, drones are a useful tool, right,
Speaker 3: but they don't really fully replace a lot of the
Speaker 3: high end weapons. You talk about destroying a tank with
Speaker 3: these tiny first person view drones that you see in Ukraine,
Speaker 3: what we see in the social media is the drone
Speaker 3: hitting the tank and the tank blowing up. We don't
Speaker 3: see like the previous twelve to fifteen first person drones
Speaker 3: that hit the tank and did nothing or disabled it,
Speaker 3: or the fact that the tank had already run over
Speaker 3: a mine and was stationary. Right, So the effects that
Speaker 3: we get from these cheap weapons aren't necessarily replacing what's there.
Speaker 3: They become an additional tool on top of what already exists.
Speaker 2: We'll get into some of the sort of numbers involved
Speaker 2: in a minute. And also I think the way it
Speaker 2: could shape economies. But as someone who's not as fully
Speaker 2: absorbing this stuff the way you both are every day,
Speaker 2: there seem to be there's sort of two things that
Speaker 2: we get told, and it feels like they can't both
Speaker 2: be true. On the one hand, at least in the
Speaker 2: early stages of the Ukraine War and people learning about
Speaker 2: drones and drones becoming a much bigger element of all
Speaker 2: of these battlefields. We got the sense that it was
Speaker 2: going to be cheap, and as Becky you say, you know,
Speaker 2: you think of it as going to be good, high
Speaker 2: bang for your buck. But there's also this sense of
Speaker 2: the sheer amount of technology involved in getting the most
Speaker 2: out of them and also developing all these other kinds
Speaker 2: of arms suggests that, you know, none of this is
Speaker 2: getting cheaper, and if anything, it's still giving a massive
Speaker 2: advantage to the countries that have the deepest pockets. There
Speaker 2: seem to be different strands. It's kind of on the
Speaker 2: one hand, you talk about it in some of your
Speaker 2: stuff about being a leveling technology AI and some of
Speaker 2: the other modern technology in innovation, you can have a
Speaker 2: country that's much smaller Ukraine's a classolic example, kind of
Speaker 2: punch above its weight. But on the other hand, it
Speaker 2: does seem that scale is still incredibly important for being
Speaker 2: able to move ahead with these cussing head technologies.
Speaker 3: And I think it's fair to say that a country
Speaker 3: with deeper pockets like a China or the United States
Speaker 3: would be able to do more with that. They would
Speaker 3: be able to put more resources into production, be able
Speaker 3: to put more resources into research and development, and so on.
Speaker 3: But the effect that they're able to get in terms
Speaker 3: of magnifying the power of their own military is going
Speaker 3: to be diminished because they have all these other capabilities
Speaker 3: that kind of do the same thing or do it better.
Speaker 3: And so what drones and some of these other technologies
Speaker 3: you mentioned AI is another good example. What they do
Speaker 3: is enable somebody who can't afford the high end, maybe
Speaker 3: who can't afford a bunch of six generation fighters, who
Speaker 3: doesn't have massive constellations of satellites overhead, who doesn't have
Speaker 3: cruise missiles that can fly thousands of miles, they're going
Speaker 3: to be able to get something like eighty percent of
Speaker 3: the combat effectiveness, being able to do eighty percent of
Speaker 3: the thing for a lot less money. And if you
Speaker 3: are a resource constrained country or military, that's a good
Speaker 3: trade off.
Speaker 2: We should sort of get a sense of some of
Speaker 2: the numbers involved when I talk about how those countries
Speaker 2: are ramping up spending around the world, I mean, what
Speaker 2: kind of numbers are we talking about for the increase
Speaker 2: in defense spending.
Speaker 1: Well, if you want to look at just the US
Speaker 1: system alone, the US defense budget requests this year is
Speaker 1: one point five trillion dollars. That's just for this year,
Speaker 1: and that amounts to roughly three point four percent of
Speaker 1: GDP spent on defense for the US. That's actually sizeably
Speaker 1: lower than what it had been spending in the Cold War,
Speaker 1: where it had a much higher percentage as a shriff GDP.
Speaker 2: A lot higher than it was a few years ago exactly.
Speaker 1: And I mean, I think again, if we want to
Speaker 1: pull it back to the NATO summit, we're defense spending
Speaker 1: is very much going to be the topic of conversation.
Speaker 1: You do see the ramp up in Europe to move
Speaker 1: toward that of three point five percent of GDP to
Speaker 1: be spent on core defense spending by twenty thirty five
Speaker 1: and twenty thirty some of the work that we've done
Speaker 1: at Bloomberg Economics show that, you know, the top countries
Speaker 1: in Europe are likely to undershoot that target and that
Speaker 1: it's going to be a very slow ramp up to
Speaker 1: get to three point five percent of GDP, and that's
Speaker 1: also going to come at a really high amount of
Speaker 1: taking on debt.
Speaker 2: Jerry, I think the figure that we had for the
Speaker 2: sort of global piece of this, at least in some aspects,
Speaker 2: was two trillion dollars across three continents, which is not
Speaker 2: far off the sort of some of the numbers we
Speaker 2: used to in relative terms for the Cold War nuclear
Speaker 2: build ups. One thing we know from that research that
Speaker 2: Becka mentioned is that the any kind of economic dividend,
Speaker 2: you know, government's like to talk about, well, and we're
Speaker 2: spending more and it's going to produce jobs and manufacturing,
Speaker 2: and it all sounds great if you can get past
Speaker 2: the military spending part, but when you actually look at
Speaker 2: the how much economic impact there is, it's probably less
Speaker 2: than other kinds of infrastructure spending. And in Europe particularly,
Speaker 2: it's going to depend a lot on whether they can
Speaker 2: grow the domestic defense sector because otherwise they're going to
Speaker 2: just be bringing in a lot of imports from the US.
Speaker 2: So how are they looking on that?
Speaker 3: Individually? European countries are not integrate position like. Many of
Speaker 3: them have a defense champion of various size, but usually
Speaker 3: there's a focus on one thing. They make avion X,
Speaker 3: or they make ships, or they make air defense system,
Speaker 3: they make tanks, arty shells, engines, something like that. Rarely
Speaker 3: in a case sort of like Germany or France, where
Speaker 3: you have even bigger companies or an assortment of companies
Speaker 3: that can do a lot of these things at a
Speaker 3: high level and sort of enable them to have a
Speaker 3: very well developed defense industry. But in order for Europe
Speaker 3: to really compete in this global arms rates that we're
Speaker 3: talking about, there has to be collective actions. There have
Speaker 3: to be coordination about who's building what. There has to
Speaker 3: be coordination on spending, There has to be coordination on
Speaker 3: what the priorities are, which right now we see as
Speaker 3: being again satellites, space based military infrastructure. We see air
Speaker 3: defense as being another big one, and then there's sort
Speaker 3: of more boring but high impact stuff like transport aircraft,
Speaker 3: like strategic airlift we call it, being able to move
Speaker 3: tanks and people all around the continent pretty easily. That's
Speaker 3: something that Europe doesn't have a lot of, and it
Speaker 3: kind of relies on the US for on NATO tanker
Speaker 3: aircraft that refuel other planes in flight and extending their range.
Speaker 3: That's another thing they lean heavily on the US for
Speaker 3: and airborne warning and control, which is something that the
Speaker 3: US again has a lot of and historically has been
Speaker 3: sort of generous about sharing with NATO partnerships, but that
Speaker 3: Europe is very interested in doing for themselves right now,
Speaker 3: and we saw that announced with the GLOBALI aircraft. They're
Speaker 3: going to buy ten of those for NATO to be
Speaker 3: airborne wanting control plane that are going to replace the
Speaker 3: older American made planes. So they're moving in that direction
Speaker 3: and it's important for a lot of reasons.
Speaker 1: Right now Europe in terms of defense spending, in terms
Speaker 1: of translating that into genuine capabilities and who's producing those capabilities.
Speaker 1: It's incredibly fragmented, and you have a fragmented defense industrial
Speaker 1: base across Europe, and eventually there's going to need to
Speaker 1: be this requirement to pick winners and losers, but that
Speaker 1: is politically unpalatable right now because of the economics, because
Speaker 1: every single country wants to see that increase in defense
Speaker 1: spend go back to their own economy, go back to
Speaker 1: their local economies, and be able to have a conversation
Speaker 1: that's no longer sort of this like guns versus butter debate.
Speaker 2: But to be fair, that's always been an element of
Speaker 2: the US debate as well when it comes to states.
Speaker 2: Everybody wants their own piece, and that has also meant
Speaker 2: that often defense spending in the US was incredibly an.
Speaker 1: Efficient, incredibly and very much concentrated in certain pockets where
Speaker 1: you had certain members of Congress who have continually fought
Speaker 1: for specific systems to not be cut when perhaps maybe
Speaker 1: it was time for them to retire because of the
Speaker 1: benefits that they brought to their district or their state.
Speaker 2: Jerry had sort of started off talking to us about
Speaker 2: the sort of tech piece of this and how that
Speaker 2: was driving some of these investments. And if we sort
Speaker 2: of combine that with the discussion we've just had, I mean,
Speaker 2: it does suggest that if governments are going to be
Speaker 2: investing more in research and development in the military space
Speaker 2: and needing to be much more connected to the companies
Speaker 2: that are developing these new technologies, that feels like even
Speaker 2: the future of AI itself, well, certainly whole areas of
Speaker 2: technology could be shaped by the fact that we're in
Speaker 2: a time of globally increasing defense spending.
Speaker 3: Yeah, I think so. And you know, if you look
Speaker 3: at a country like China, where there's this intense interweaving
Speaker 3: of the public and the private sector and you know,
Speaker 3: the universities and the government.
Speaker 2: You talk about the civil military fusion.
Speaker 3: Exactly exactly where you know, in some sense that gives
Speaker 3: China an advantage because any any breakthrough that happens, whether
Speaker 3: it's at a private company or a research university, or
Speaker 3: you know in some you know, random lap in the hinterlands,
Speaker 3: it will end up in the hands of the Chinese government,
Speaker 3: or they will at least have the opportunity to evaluate
Speaker 3: it and decide whether that's going to be you know,
Speaker 3: militarily applicable or not. That also translates into traditional defense
Speaker 3: buildouts as well. You know, the Chinese government decides that
Speaker 3: they need more aircraft, there's not really a fight over
Speaker 3: you know, whose congressional district they get built in or
Speaker 3: anything like that. You know, sort of the machine starts up,
Speaker 3: and then you compare and contrast that to the way
Speaker 3: Europe is set up, whereas Beca said, there's always going
Speaker 3: to be friction about, you know, who's going to be
Speaker 3: the winner, who's going to be the loser. We saw that,
Speaker 3: you know, f cast program, which was supposed to you know,
Speaker 3: have the two largest aircraft companies in Europe, like the
Speaker 3: so and Airbus are going to combine forces and make
Speaker 3: the sixth generation plane. We saw that fall apart because
Speaker 3: the two companies couldn't get along, and that's not something
Speaker 3: really that happens in China, so to that extent they
Speaker 3: might have an advantage and the way they moved this
Speaker 3: sort of innovation.
Speaker 2: Forward, Becca, I'm sort of HARKing back on this point
Speaker 2: about the closer connection between the government and the tech sector.
Speaker 2: I mean, I guess we saw that most recently with
Speaker 2: that between Anthropic and the Pentagon. A lot of people
Speaker 2: would be concerned that the biggest tech firms who are
Speaker 2: right at the forefront of this and the biggest amounts
Speaker 2: of money are going into the military applications of AI
Speaker 2: rather than other things. Is that I mean, should we
Speaker 2: be worried that that's just going to shape the future
Speaker 2: of AI?
Speaker 1: I mean we should be worried about, you know, how
Speaker 1: AI is going to be integrated into the military. More broadly,
Speaker 1: there are some very benign applications. One of the ones
Speaker 1: that I've heard the most from the US military is
Speaker 1: trying to use AI to speed up essentially, it's modeling
Speaker 1: for how it gets logistics from one place to another. Right,
Speaker 1: that's to me, that's a benign way, Like, Okay, let's
Speaker 1: speed up processes. Let's speed up things that take tons
Speaker 1: of hours of people just you know, hand jamming things
Speaker 1: into a spreadsheet like it's nineteen ninety nine instead, you know,
Speaker 1: trying to think about the ways in which you can
Speaker 1: have good use cases, but you could also equally have
Speaker 1: some negative use cases. And traditionally the Pentagon has put
Speaker 1: some guardrails. Some of those guardrails have actually been relaxed
Speaker 1: by the Trump administration. So now we've seen in places
Speaker 1: on the battlefield, specifically in the Iran War, where there's
Speaker 1: been heavy use of AI tools, particularly Pallinteers madeven smart
Speaker 1: system to try and speed up some of the targeting
Speaker 1: processes to get that decision making advantage that so many
Speaker 1: militaries want. You know, that puts the US and frankly
Speaker 1: other militaries on a potentially tricky slope. That's not to
Speaker 1: say that there are not guardrails against using AI for
Speaker 1: some of the most dangerous things. I think there's a
Speaker 1: lot of pushback, and rightfully so, on the integration of
Speaker 1: AI into nuclear command and control. So essentially, whether AI
Speaker 1: can help make decisions about the use or non use
Speaker 1: of nuclear weapons, to me, that should be very much
Speaker 1: a human decision making process.
Speaker 2: Jerry I started mentioning about the nuclear piece of countries
Speaker 2: might have concluded from the way the world has gone
Speaker 2: recently that actually they have an interest in acquiring nuclear weapons. Supposedly,
Speaker 2: we only have nine nuclear powers currently in the world.
Speaker 2: But are we actually seeing countries developing an increase in
Speaker 2: the number of countries wanting to develop and is there
Speaker 2: a potential and rather frightening overlap with our previous conversation
Speaker 2: about AI.
Speaker 3: In the defense world, there's always the possibility of frightening overlap.
Speaker 3: It's frightening overlap all the way down. But looking at
Speaker 3: nuclear weapons specifically, as far as we know, nobody who
Speaker 3: doesn't currently have nuclear weapons has actively spun up a
Speaker 3: program to create them. What we have seen is expression
Speaker 3: of interest from European countries about getting more deeply involved
Speaker 3: with existing nuclear programs. Specifically, Francis macrong has spoken, you know,
Speaker 3: sort of in very plain terms about France wanting to
Speaker 3: expand it's arsenal, wanting to offer a nuclear umbrella to
Speaker 3: the rest of Europe to sort of replace what he sees,
Speaker 3: as you know, the US pulling back from its commitments there.
Speaker 3: We also see in Asia sort of open conversations in
Speaker 3: Japan and South Korea about acquiring nuclear weapons that work
Speaker 3: hasn't started yet as far as we've known, and there
Speaker 3: hasn't been any official government decision to move that forward.
Speaker 3: But the fact that those conversations are happening in the
Speaker 3: open says it is real right that desire, that fear
Speaker 3: is there. Nobody wants to get left behind. And when
Speaker 3: you see what's happened in places like Ukraine and Iran,
Speaker 3: the easiest equation to apply to that is, well, you know,
Speaker 3: if those countries had had nuclear weapons, like North Korea,
Speaker 3: this wouldn't have happened. That's exactly right. And as Becka said, further,
Speaker 3: applying developing technologies to nuclear arsenal things like artificial intelligence,
Speaker 3: that is a concern and it's something to be worried about.
Speaker 3: I think at this point everybody who has nuclear weapons
Speaker 3: is extremely aware of the problems that they could come
Speaker 3: from linking artificial intelligence to nuclear stockpiles. When I was
Speaker 3: in Singapore for the Shngrol dialogues, there's a higher ranking
Speaker 3: generals in both the People's Liberation Army China and Pakisthan
Speaker 3: military sort of spoke openly about this that their fear
Speaker 3: of AI was not that it would sort of you know,
Speaker 3: take over in sort of an actual artificial intelligence way,
Speaker 3: but that tools using AI would speed up decision making
Speaker 3: processes to the point where people would sort of was
Speaker 3: the cool Essentially, you know, they would think, you know,
Speaker 3: instead of having twenty minutes to respond to a nuclear
Speaker 3: attack or ten minutes or something, everything would move so
Speaker 3: fast with you know, recommendation for responses and things like that,
Speaker 3: that somebody would make a rast decision and things would
Speaker 3: get worse instead of better. So those are the kind
Speaker 3: of guardrails I think that broadly countries are looking to
Speaker 3: apply to that sort of thing.
Speaker 2: And of course we did have examples in the Cold
Speaker 2: War of that, you know, whether the machine or is
Speaker 2: telling an individual pilot or whatever this is this is
Speaker 2: a nuclear attack, and at least there were minutes there
Speaker 2: as opposed to seconds for them to think is this realistic?
Speaker 3: And it reglied on humans ultimately to make the decision
Speaker 3: about what to do next.
Speaker 2: In the past, defense departments have been very good at
Speaker 2: talking a good game about fantastic new technologies that were
Speaker 2: coming down the track. We had Star Wars, now we've
Speaker 2: had I mean, Becker has done some very elaborate costing
Speaker 2: that where the numbers get very large for the so
Speaker 2: called Golden Dome that Donald Trump has talked about for
Speaker 2: the whole of the US, and an awful loss of
Speaker 2: that money has been wasted. They talked a good game
Speaker 2: but didn't really pan out. Is an awful lot of
Speaker 2: this money just going to be wasted?
Speaker 3: I mean, yes, It's hard to say how much, though,
Speaker 3: because sometimes technology pans out. Sometimes you set out to
Speaker 3: go to the moon and you do it. But other times,
Speaker 3: you know, you set out to build orbital nuclear defenses
Speaker 3: and it just doesn't work. You spend you know, hundreds
Speaker 3: and hundreds of billions of dollars on it, and nothing
Speaker 3: gets in orbit and nothing works, and then you give
Speaker 3: up and walk away, and then you try again thirty
Speaker 3: years later, which is what we're doing around right now.
Speaker 3: Of course, that remains to be seen whether Golden Dome
Speaker 3: is going to be what it is being pitched as being,
Speaker 3: or whether any of the technology being developed for it
Speaker 3: will become real and.
Speaker 2: More useful for the rest of the economy. Because that's
Speaker 2: the other thing that has always said, is the technological
Speaker 2: spill overs.
Speaker 3: That's true. I mean, a lot of this stuff is
Speaker 3: fairly narrowly focused. It's hard to see, you know what
Speaker 3: an application for you know, a high energy laser would
Speaker 3: be you know, in my backyard, as much as I'd
Speaker 3: love to have one, you know, a space based.
Speaker 2: Because there's loads of money at not very many jobs
Speaker 2: and not very many civilian applications.
Speaker 3: Yeah, I mean exactly exactly, So you know, it remains
Speaker 3: to be seen. I think some of that will will
Speaker 3: become real and weaponized, and some of it will find
Speaker 3: its way into the arsenals of the US and China
Speaker 3: and Europe and other countries, and some of it will
Speaker 3: end up having civilian applications, but some large percentage of it,
Speaker 3: less than half, I would say, will just be on
Speaker 3: dead ends. And that's just kind of the nature of
Speaker 3: the game when it comes to developing defend technology.
Speaker 2: I guess in the end, if we never found out
Speaker 2: whether it worked or not, might even be a good
Speaker 2: outcome for humanity.
Speaker 3: I'd sign up for that, all right.
Speaker 2: So I guess I don't know if it's positive or
Speaker 2: not that we've concluded that it's not very good for
Speaker 2: the economy and may not work, but at least it
Speaker 2: costs a lot of money.
Speaker 3: When you put it that way, it doesn't sound great it.
Speaker 1: But do you want to know it also is expensive,
Speaker 1: or war is expensive, and ultimately, so much of these
Speaker 1: weapons is not just about this idea of prosecuting war.
Speaker 1: It's to actually deter war from happening in the first place.
Speaker 1: And so yes, there's almost this perverse incentive where you
Speaker 1: do see high defense budgets. You see a lot of
Speaker 1: money being wasted on, say a missile technology that doesn't work,
Speaker 1: only to be used later on in another application that
Speaker 1: does work. But ultimately all of this is trying to
Speaker 1: make it so that countries feel safe and protected, can
Speaker 1: deter aggression from happening, so we don't find ourselves in
Speaker 1: catastrophic war that can cost trillions and trillions of dollars.
Speaker 3: Yeah, and just on top of that, then if you
Speaker 3: look at the Cold War as an example, the absolute
Speaker 3: mind boggling number of nuclear weapons there were, and delivery
Speaker 3: systems and all just the crazy stuff that they came
Speaker 3: up with to conduct nuclear war. In the end, all
Speaker 3: of that sort of the purpose if you sort of
Speaker 3: buy into the theory behind it of making sure it
Speaker 3: never happened. And I guess some of the proof in
Speaker 3: the putting there is that as soon as the Cold
Speaker 3: War ended, a lot of those stack Biles just disappeared.
Speaker 2: Well, it strikes me we also felt secure for a
Speaker 2: lot less money when there was confidence in collective security
Speaker 2: arrangements like NATO, but that is another matter. Becka and
Speaker 2: Jerry thank you so much, Ques, thanks for listening to
Speaker 2: Trumpnomics from Bloomberg. It was hosted by me, Stephanie Flanders,
Speaker 2: and I was joined by Becca Wasser, Defense lead for
Speaker 2: Bloomberg Economics and Jerry Doyle, Global Defense Editor for Bloomberg News.
Speaker 2: Trumponomics was produced by Moss and Dam and Sammasadi with
Speaker 2: help from Amy Keane and sound designed by Blake Maples
Speaker 2: and Kelly Gary to help others find Trumpanomics, rate and
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