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The $2 Trillion Global Arms Race · Trumponomics

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
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Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
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Speaker 2: and this is Trumpnomics, the podcast that looks at the
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Speaker 2: economic world of Donald Trump, how he's already shaking up
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Speaker 2: the global economy and what on earth is going to
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Speaker 2: happen next. This week, we have NATO leaders, donald Trump
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Speaker 2: among them, gathering in Turkey for what could be one
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Speaker 2: of the alliance's more consequential summits. I'm recording on Tuesday morning,
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Speaker 2: US time, and President Donald Trump has already arrived in Anchoror.
0:47
Speaker 2: He's expected to meet with the Turkish president there and
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Speaker 2: other leaders. And the focus of these meetings recently, particularly
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Speaker 2: under President Trump, has tended to be money. The constant
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Speaker 2: and reasonable refriras from the US being that Europe needs
1:01
Speaker 2: to spend more on confronting the risks at their borders
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Speaker 2: and shouldn't continue to rely only on the security blanket
1:08
Speaker 2: of the US. But it's not just NATO. Defense spending
1:12
Speaker 2: is ramping up all over the world in a new
1:15
Speaker 2: global arms race that could look and feel very different
1:20
Speaker 2: from the last one. For the first time that's the
1:22
Speaker 2: Cold War. Many countries are aiming to acquire nuclear weapons,
1:26
Speaker 2: or at least look like they might want to, and
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Speaker 2: the guardrails previously constraining that proliferation have more or less
1:33
Speaker 2: fallen away. We're also seeing very dramatically how drones and
1:38
Speaker 2: AI have transformed the battlefield in Ukraine and Iran, and
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Speaker 2: that has countries trying to beat their rivals to the
1:45
Speaker 2: next generation of hypersonic weapons and other things. So all
1:49
Speaker 2: of this, I think could raise big questions not just
1:52
Speaker 2: about the conduct of future wars, but also given the
1:54
Speaker 2: amounts involved shape parts of our economy. So what are
1:59
Speaker 2: the key features of this new arms race and what's
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Speaker 2: it going to mean for the global economy of governments
2:05
Speaker 2: one after the other make military tech one of their
2:08
Speaker 2: biggest investment priorities. Becker Wasser is the Defense lead for
2:13
Speaker 2: Bloomberg Economics. Previously, she led studies and wargames for the
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Speaker 2: US Department of Defense at the Center for a New
2:19
Speaker 2: American Security and that the RAND Corporation. Becker has also
2:23
Speaker 2: been a staff member on a congressionally appointed Committee on
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Speaker 2: the National Defense Strategy. Becker, welcome back to Trumpennomics.
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Speaker 1: Yeah, thanks for having me.
2:31
Speaker 2: And Jerry Doyle is Global Defense editor on the news
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Speaker 2: side for Bloomberg News. Jerry, thanks for coming, Thanks for
2:38
Speaker 2: having me. Jerry, just tell us what are people buying
2:47
Speaker 2: or what are government's buying and why is so much
2:50
Speaker 2: of it happening right now.
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Speaker 3: Well, so much of this investment in defense technology kind
2:56
Speaker 3: of started with the Russian invasion of Ukraine. That's sort
2:59
Speaker 3: of urgency to the whole situation, not just in Europe
3:03
Speaker 3: but globally, as countries started to quickly realize that they
3:07
Speaker 3: might have underinvested since the end of the Cold War.
3:10
Speaker 3: So that led a lot of country to start buying
3:13
Speaker 3: a lot of the traditional things that you expect to
3:15
Speaker 3: see on a battlefield, the tanks, the planes, missiles, artillery
3:18
Speaker 3: with a huge priority. And now we've sort of move
3:21
Speaker 3: past that and started to look at what is going
3:24
Speaker 3: to be the technology that's going to dominate the future
3:27
Speaker 3: battlefield for decades. During the Cold War, you saw that
3:32
Speaker 3: manifest itself. That arms race manifests itself in terms of
3:35
Speaker 3: nuclear weapons, not just the total stockpile sizes, but you know,
3:40
Speaker 3: strange novel waves of delivering them, different effects that you
3:43
Speaker 3: can create with with nuclear weapons. And this current arms
3:47
Speaker 3: race that we're seeing right now is not about that
3:49
Speaker 3: it's not about, you know, being able to deliver megatons
3:52
Speaker 3: with the death onto a city. It's sort of more subtle.
3:56
Speaker 3: It's trying to find ways to give yourself an advantage
3:59
Speaker 3: in the future, doing things like investment drones for different
4:03
Speaker 3: types of things, for defense, for offense, for surveillance, the
4:07
Speaker 3: militarization of space, trying to figure out ways to protect
4:11
Speaker 3: your satellites in orbit, trying to find ways to give
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Speaker 3: your military an advantage with the things that you place
4:17
Speaker 3: in orbit. And then hypersonic weapons, which are sort of
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Speaker 3: a more traditional means of destruction but with a novel
4:25
Speaker 3: twist of being able to maneuverate extremely high feeds, avoid
4:29
Speaker 3: air defenses and so on. And we've seen that, and
4:33
Speaker 3: we've seen the drones sort of in practice happening on
4:37
Speaker 3: battlefield right now, and it's about trying to figure out
4:39
Speaker 3: a way to find that, trying to figure out ways
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Speaker 3: to improve and apply these things on a large scale.
4:46
Speaker 1: I think Jerry rays is something that's really interesting, and
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Speaker 1: it's using all of these technologies to gain an advantage.
4:53
Speaker 1: But what does that look like? And I think here
4:55
Speaker 1: there's a few things. There's the decision advantage. Who can
4:58
Speaker 1: make decisions faster and therefore gain the initiative, and that's
5:01
Speaker 1: where things like AI enabled technologies come in. But you
5:05
Speaker 1: also have this idea of mass, who can put more
5:09
Speaker 1: on the battlefield at any given time to overwhelm defenses,
5:13
Speaker 1: to overwhelm your adversary, and that's where you see things
5:16
Speaker 1: like low cost drones and lower cost missiles come in.
5:20
Speaker 1: And then I think the last area of advantage is
5:23
Speaker 1: this idea of cost. Who can do that cheapest? And
5:27
Speaker 1: that's where some of these more traditional weapons systems, these
5:31
Speaker 1: higher end missiles, hypersonics space, that's all very expensive. And
5:36
Speaker 1: that's why you see a lot of governments and a
5:38
Speaker 1: lot of militaries going all in on AI and all
5:41
Speaker 1: in on drones because they think that it can get
5:44
Speaker 1: them the best effect for the cheapest bang on the buck.
5:49
Speaker 1: But just on their own, drones aren't going to be
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Speaker 1: the solution to all problems, and I think sometimes we
5:55
Speaker 1: do see a lot of militaries, particularly those that either
5:58
Speaker 1: have manpower constraint like Ukraine, or those who have fiscal
6:03
Speaker 1: constraints like arguably some countries in Europe, going all in
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Speaker 1: on drones to try and make up for those sharkfalls.
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Speaker 3: It's absolutely true that you know, drones are a useful tool, right,
6:14
Speaker 3: but they don't really fully replace a lot of the
6:17
Speaker 3: high end weapons. You talk about destroying a tank with
6:21
Speaker 3: these tiny first person view drones that you see in Ukraine,
6:25
Speaker 3: what we see in the social media is the drone
6:28
Speaker 3: hitting the tank and the tank blowing up. We don't
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Speaker 3: see like the previous twelve to fifteen first person drones
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Speaker 3: that hit the tank and did nothing or disabled it,
6:36
Speaker 3: or the fact that the tank had already run over
6:38
Speaker 3: a mine and was stationary. Right, So the effects that
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Speaker 3: we get from these cheap weapons aren't necessarily replacing what's there.
6:45
Speaker 3: They become an additional tool on top of what already exists.
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Speaker 2: We'll get into some of the sort of numbers involved
6:52
Speaker 2: in a minute. And also I think the way it
6:55
Speaker 2: could shape economies. But as someone who's not as fully
7:00
Speaker 2: absorbing this stuff the way you both are every day,
7:04
Speaker 2: there seem to be there's sort of two things that
7:06
Speaker 2: we get told, and it feels like they can't both
7:08
Speaker 2: be true. On the one hand, at least in the
7:11
Speaker 2: early stages of the Ukraine War and people learning about
7:14
Speaker 2: drones and drones becoming a much bigger element of all
7:16
Speaker 2: of these battlefields. We got the sense that it was
7:19
Speaker 2: going to be cheap, and as Becky you say, you know,
7:21
Speaker 2: you think of it as going to be good, high
7:24
Speaker 2: bang for your buck. But there's also this sense of
7:27
Speaker 2: the sheer amount of technology involved in getting the most
7:30
Speaker 2: out of them and also developing all these other kinds
7:32
Speaker 2: of arms suggests that, you know, none of this is
7:35
Speaker 2: getting cheaper, and if anything, it's still giving a massive
7:38
Speaker 2: advantage to the countries that have the deepest pockets. There
7:40
Speaker 2: seem to be different strands. It's kind of on the
7:42
Speaker 2: one hand, you talk about it in some of your
7:44
Speaker 2: stuff about being a leveling technology AI and some of
7:48
Speaker 2: the other modern technology in innovation, you can have a
7:51
Speaker 2: country that's much smaller Ukraine's a classolic example, kind of
7:55
Speaker 2: punch above its weight. But on the other hand, it
7:57
Speaker 2: does seem that scale is still incredibly important for being
8:00
Speaker 2: able to move ahead with these cussing head technologies.
8:03
Speaker 3: And I think it's fair to say that a country
8:06
Speaker 3: with deeper pockets like a China or the United States
8:10
Speaker 3: would be able to do more with that. They would
8:12
Speaker 3: be able to put more resources into production, be able
8:15
Speaker 3: to put more resources into research and development, and so on.
8:18
Speaker 3: But the effect that they're able to get in terms
8:22
Speaker 3: of magnifying the power of their own military is going
8:25
Speaker 3: to be diminished because they have all these other capabilities
8:28
Speaker 3: that kind of do the same thing or do it better.
8:31
Speaker 3: And so what drones and some of these other technologies
8:34
Speaker 3: you mentioned AI is another good example. What they do
8:37
Speaker 3: is enable somebody who can't afford the high end, maybe
8:42
Speaker 3: who can't afford a bunch of six generation fighters, who
8:45
Speaker 3: doesn't have massive constellations of satellites overhead, who doesn't have
8:49
Speaker 3: cruise missiles that can fly thousands of miles, they're going
8:52
Speaker 3: to be able to get something like eighty percent of
8:56
Speaker 3: the combat effectiveness, being able to do eighty percent of
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Speaker 3: the thing for a lot less money. And if you
9:03
Speaker 3: are a resource constrained country or military, that's a good
9:06
Speaker 3: trade off.
9:07
Speaker 2: We should sort of get a sense of some of
9:09
Speaker 2: the numbers involved when I talk about how those countries
9:14
Speaker 2: are ramping up spending around the world, I mean, what
9:16
Speaker 2: kind of numbers are we talking about for the increase
9:18
Speaker 2: in defense spending.
9:20
Speaker 1: Well, if you want to look at just the US
9:21
Speaker 1: system alone, the US defense budget requests this year is
9:26
Speaker 1: one point five trillion dollars. That's just for this year,
9:29
Speaker 1: and that amounts to roughly three point four percent of
9:33
Speaker 1: GDP spent on defense for the US. That's actually sizeably
9:38
Speaker 1: lower than what it had been spending in the Cold War,
9:41
Speaker 1: where it had a much higher percentage as a shriff GDP.
9:45
Speaker 2: A lot higher than it was a few years ago exactly.
9:48
Speaker 1: And I mean, I think again, if we want to
9:50
Speaker 1: pull it back to the NATO summit, we're defense spending
9:52
Speaker 1: is very much going to be the topic of conversation.
9:56
Speaker 1: You do see the ramp up in Europe to move
9:59
Speaker 1: toward that of three point five percent of GDP to
10:02
Speaker 1: be spent on core defense spending by twenty thirty five
10:06
Speaker 1: and twenty thirty some of the work that we've done
10:08
Speaker 1: at Bloomberg Economics show that, you know, the top countries
10:11
Speaker 1: in Europe are likely to undershoot that target and that
10:15
Speaker 1: it's going to be a very slow ramp up to
10:17
Speaker 1: get to three point five percent of GDP, and that's
10:20
Speaker 1: also going to come at a really high amount of
10:24
Speaker 1: taking on debt.
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Speaker 2: Jerry, I think the figure that we had for the
10:28
Speaker 2: sort of global piece of this, at least in some aspects,
10:31
Speaker 2: was two trillion dollars across three continents, which is not
10:37
Speaker 2: far off the sort of some of the numbers we
10:39
Speaker 2: used to in relative terms for the Cold War nuclear
10:44
Speaker 2: build ups. One thing we know from that research that
10:47
Speaker 2: Becka mentioned is that the any kind of economic dividend,
10:51
Speaker 2: you know, government's like to talk about, well, and we're
10:52
Speaker 2: spending more and it's going to produce jobs and manufacturing,
10:55
Speaker 2: and it all sounds great if you can get past
10:57
Speaker 2: the military spending part, but when you actually look at
11:02
Speaker 2: the how much economic impact there is, it's probably less
11:06
Speaker 2: than other kinds of infrastructure spending. And in Europe particularly,
11:10
Speaker 2: it's going to depend a lot on whether they can
11:12
Speaker 2: grow the domestic defense sector because otherwise they're going to
11:16
Speaker 2: just be bringing in a lot of imports from the US.
11:19
Speaker 2: So how are they looking on that?
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Speaker 3: Individually? European countries are not integrate position like. Many of
11:26
Speaker 3: them have a defense champion of various size, but usually
11:30
Speaker 3: there's a focus on one thing. They make avion X,
11:34
Speaker 3: or they make ships, or they make air defense system,
11:37
Speaker 3: they make tanks, arty shells, engines, something like that. Rarely
11:41
Speaker 3: in a case sort of like Germany or France, where
11:43
Speaker 3: you have even bigger companies or an assortment of companies
11:47
Speaker 3: that can do a lot of these things at a
11:49
Speaker 3: high level and sort of enable them to have a
11:51
Speaker 3: very well developed defense industry. But in order for Europe
11:54
Speaker 3: to really compete in this global arms rates that we're
11:57
Speaker 3: talking about, there has to be collective actions. There have
12:00
Speaker 3: to be coordination about who's building what. There has to
12:04
Speaker 3: be coordination on spending, There has to be coordination on
12:07
Speaker 3: what the priorities are, which right now we see as
12:10
Speaker 3: being again satellites, space based military infrastructure. We see air
12:15
Speaker 3: defense as being another big one, and then there's sort
12:18
Speaker 3: of more boring but high impact stuff like transport aircraft,
12:23
Speaker 3: like strategic airlift we call it, being able to move
12:26
Speaker 3: tanks and people all around the continent pretty easily. That's
12:29
Speaker 3: something that Europe doesn't have a lot of, and it
12:31
Speaker 3: kind of relies on the US for on NATO tanker
12:35
Speaker 3: aircraft that refuel other planes in flight and extending their range.
12:39
Speaker 3: That's another thing they lean heavily on the US for
12:42
Speaker 3: and airborne warning and control, which is something that the
12:45
Speaker 3: US again has a lot of and historically has been
12:48
Speaker 3: sort of generous about sharing with NATO partnerships, but that
12:52
Speaker 3: Europe is very interested in doing for themselves right now,
12:56
Speaker 3: and we saw that announced with the GLOBALI aircraft. They're
13:00
Speaker 3: going to buy ten of those for NATO to be
13:02
Speaker 3: airborne wanting control plane that are going to replace the
13:06
Speaker 3: older American made planes. So they're moving in that direction
13:10
Speaker 3: and it's important for a lot of reasons.
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Speaker 1: Right now Europe in terms of defense spending, in terms
13:16
Speaker 1: of translating that into genuine capabilities and who's producing those capabilities.
13:21
Speaker 1: It's incredibly fragmented, and you have a fragmented defense industrial
13:25
Speaker 1: base across Europe, and eventually there's going to need to
13:28
Speaker 1: be this requirement to pick winners and losers, but that
13:32
Speaker 1: is politically unpalatable right now because of the economics, because
13:37
Speaker 1: every single country wants to see that increase in defense
13:39
Speaker 1: spend go back to their own economy, go back to
13:42
Speaker 1: their local economies, and be able to have a conversation
13:46
Speaker 1: that's no longer sort of this like guns versus butter debate.
13:50
Speaker 2: But to be fair, that's always been an element of
13:52
Speaker 2: the US debate as well when it comes to states.
13:54
Speaker 2: Everybody wants their own piece, and that has also meant
13:57
Speaker 2: that often defense spending in the US was incredibly an.
14:00
Speaker 1: Efficient, incredibly and very much concentrated in certain pockets where
14:04
Speaker 1: you had certain members of Congress who have continually fought
14:08
Speaker 1: for specific systems to not be cut when perhaps maybe
14:12
Speaker 1: it was time for them to retire because of the
14:14
Speaker 1: benefits that they brought to their district or their state.
14:30
Speaker 2: Jerry had sort of started off talking to us about
14:33
Speaker 2: the sort of tech piece of this and how that
14:36
Speaker 2: was driving some of these investments. And if we sort
14:39
Speaker 2: of combine that with the discussion we've just had, I mean,
14:41
Speaker 2: it does suggest that if governments are going to be
14:46
Speaker 2: investing more in research and development in the military space
14:51
Speaker 2: and needing to be much more connected to the companies
14:55
Speaker 2: that are developing these new technologies, that feels like even
15:00
Speaker 2: the future of AI itself, well, certainly whole areas of
15:03
Speaker 2: technology could be shaped by the fact that we're in
15:05
Speaker 2: a time of globally increasing defense spending.
15:10
Speaker 3: Yeah, I think so. And you know, if you look
15:12
Speaker 3: at a country like China, where there's this intense interweaving
15:17
Speaker 3: of the public and the private sector and you know,
15:19
Speaker 3: the universities and the government.
15:22
Speaker 2: You talk about the civil military fusion.
15:24
Speaker 3: Exactly exactly where you know, in some sense that gives
15:28
Speaker 3: China an advantage because any any breakthrough that happens, whether
15:33
Speaker 3: it's at a private company or a research university, or
15:36
Speaker 3: you know in some you know, random lap in the hinterlands,
15:39
Speaker 3: it will end up in the hands of the Chinese government,
15:42
Speaker 3: or they will at least have the opportunity to evaluate
15:45
Speaker 3: it and decide whether that's going to be you know,
15:47
Speaker 3: militarily applicable or not. That also translates into traditional defense
15:53
Speaker 3: buildouts as well. You know, the Chinese government decides that
15:56
Speaker 3: they need more aircraft, there's not really a fight over
15:59
Speaker 3: you know, whose congressional district they get built in or
16:02
Speaker 3: anything like that. You know, sort of the machine starts up,
16:05
Speaker 3: and then you compare and contrast that to the way
16:07
Speaker 3: Europe is set up, whereas Beca said, there's always going
16:10
Speaker 3: to be friction about, you know, who's going to be
16:12
Speaker 3: the winner, who's going to be the loser. We saw that,
16:14
Speaker 3: you know, f cast program, which was supposed to you know,
16:17
Speaker 3: have the two largest aircraft companies in Europe, like the
16:22
Speaker 3: so and Airbus are going to combine forces and make
16:25
Speaker 3: the sixth generation plane. We saw that fall apart because
16:28
Speaker 3: the two companies couldn't get along, and that's not something
16:31
Speaker 3: really that happens in China, so to that extent they
16:36
Speaker 3: might have an advantage and the way they moved this
16:38
Speaker 3: sort of innovation.
16:39
Speaker 2: Forward, Becca, I'm sort of HARKing back on this point
16:42
Speaker 2: about the closer connection between the government and the tech sector.
16:47
Speaker 2: I mean, I guess we saw that most recently with
16:49
Speaker 2: that between Anthropic and the Pentagon. A lot of people
16:52
Speaker 2: would be concerned that the biggest tech firms who are
16:55
Speaker 2: right at the forefront of this and the biggest amounts
16:58
Speaker 2: of money are going into the military applications of AI
17:02
Speaker 2: rather than other things. Is that I mean, should we
17:04
Speaker 2: be worried that that's just going to shape the future
17:06
Speaker 2: of AI?
17:07
Speaker 1: I mean we should be worried about, you know, how
17:10
Speaker 1: AI is going to be integrated into the military. More broadly,
17:13
Speaker 1: there are some very benign applications. One of the ones
17:16
Speaker 1: that I've heard the most from the US military is
17:19
Speaker 1: trying to use AI to speed up essentially, it's modeling
17:24
Speaker 1: for how it gets logistics from one place to another. Right,
17:28
Speaker 1: that's to me, that's a benign way, Like, Okay, let's
17:31
Speaker 1: speed up processes. Let's speed up things that take tons
17:34
Speaker 1: of hours of people just you know, hand jamming things
17:37
Speaker 1: into a spreadsheet like it's nineteen ninety nine instead, you know,
17:42
Speaker 1: trying to think about the ways in which you can
17:44
Speaker 1: have good use cases, but you could also equally have
17:47
Speaker 1: some negative use cases. And traditionally the Pentagon has put
17:51
Speaker 1: some guardrails. Some of those guardrails have actually been relaxed
17:55
Speaker 1: by the Trump administration. So now we've seen in places
17:59
Speaker 1: on the battlefield, specifically in the Iran War, where there's
18:03
Speaker 1: been heavy use of AI tools, particularly Pallinteers madeven smart
18:07
Speaker 1: system to try and speed up some of the targeting
18:10
Speaker 1: processes to get that decision making advantage that so many
18:14
Speaker 1: militaries want. You know, that puts the US and frankly
18:18
Speaker 1: other militaries on a potentially tricky slope. That's not to
18:22
Speaker 1: say that there are not guardrails against using AI for
18:24
Speaker 1: some of the most dangerous things. I think there's a
18:28
Speaker 1: lot of pushback, and rightfully so, on the integration of
18:32
Speaker 1: AI into nuclear command and control. So essentially, whether AI
18:38
Speaker 1: can help make decisions about the use or non use
18:41
Speaker 1: of nuclear weapons, to me, that should be very much
18:45
Speaker 1: a human decision making process.
18:48
Speaker 2: Jerry I started mentioning about the nuclear piece of countries
18:52
Speaker 2: might have concluded from the way the world has gone
18:54
Speaker 2: recently that actually they have an interest in acquiring nuclear weapons. Supposedly,
18:59
Speaker 2: we only have nine nuclear powers currently in the world.
19:01
Speaker 2: But are we actually seeing countries developing an increase in
19:06
Speaker 2: the number of countries wanting to develop and is there
19:09
Speaker 2: a potential and rather frightening overlap with our previous conversation
19:12
Speaker 2: about AI.
19:13
Speaker 3: In the defense world, there's always the possibility of frightening overlap.
19:17
Speaker 3: It's frightening overlap all the way down. But looking at
19:20
Speaker 3: nuclear weapons specifically, as far as we know, nobody who
19:25
Speaker 3: doesn't currently have nuclear weapons has actively spun up a
19:28
Speaker 3: program to create them. What we have seen is expression
19:32
Speaker 3: of interest from European countries about getting more deeply involved
19:36
Speaker 3: with existing nuclear programs. Specifically, Francis macrong has spoken, you know,
19:41
Speaker 3: sort of in very plain terms about France wanting to
19:44
Speaker 3: expand it's arsenal, wanting to offer a nuclear umbrella to
19:48
Speaker 3: the rest of Europe to sort of replace what he sees,
19:51
Speaker 3: as you know, the US pulling back from its commitments there.
19:54
Speaker 3: We also see in Asia sort of open conversations in
19:58
Speaker 3: Japan and South Korea about acquiring nuclear weapons that work
20:02
Speaker 3: hasn't started yet as far as we've known, and there
20:05
Speaker 3: hasn't been any official government decision to move that forward.
20:08
Speaker 3: But the fact that those conversations are happening in the
20:11
Speaker 3: open says it is real right that desire, that fear
20:14
Speaker 3: is there. Nobody wants to get left behind. And when
20:17
Speaker 3: you see what's happened in places like Ukraine and Iran,
20:21
Speaker 3: the easiest equation to apply to that is, well, you know,
20:26
Speaker 3: if those countries had had nuclear weapons, like North Korea,
20:29
Speaker 3: this wouldn't have happened. That's exactly right. And as Becka said, further,
20:34
Speaker 3: applying developing technologies to nuclear arsenal things like artificial intelligence,
20:40
Speaker 3: that is a concern and it's something to be worried about.
20:42
Speaker 3: I think at this point everybody who has nuclear weapons
20:47
Speaker 3: is extremely aware of the problems that they could come
20:51
Speaker 3: from linking artificial intelligence to nuclear stockpiles. When I was
20:55
Speaker 3: in Singapore for the Shngrol dialogues, there's a higher ranking
20:59
Speaker 3: generals in both the People's Liberation Army China and Pakisthan
21:04
Speaker 3: military sort of spoke openly about this that their fear
21:07
Speaker 3: of AI was not that it would sort of you know,
21:10
Speaker 3: take over in sort of an actual artificial intelligence way,
21:14
Speaker 3: but that tools using AI would speed up decision making
21:18
Speaker 3: processes to the point where people would sort of was
21:22
Speaker 3: the cool Essentially, you know, they would think, you know,
21:25
Speaker 3: instead of having twenty minutes to respond to a nuclear
21:28
Speaker 3: attack or ten minutes or something, everything would move so
21:31
Speaker 3: fast with you know, recommendation for responses and things like that,
21:35
Speaker 3: that somebody would make a rast decision and things would
21:38
Speaker 3: get worse instead of better. So those are the kind
21:40
Speaker 3: of guardrails I think that broadly countries are looking to
21:45
Speaker 3: apply to that sort of thing.
21:46
Speaker 2: And of course we did have examples in the Cold
21:48
Speaker 2: War of that, you know, whether the machine or is
21:50
Speaker 2: telling an individual pilot or whatever this is this is
21:54
Speaker 2: a nuclear attack, and at least there were minutes there
21:57
Speaker 2: as opposed to seconds for them to think is this realistic?
22:00
Speaker 3: And it reglied on humans ultimately to make the decision
22:04
Speaker 3: about what to do next.
22:06
Speaker 2: In the past, defense departments have been very good at
22:09
Speaker 2: talking a good game about fantastic new technologies that were
22:13
Speaker 2: coming down the track. We had Star Wars, now we've
22:15
Speaker 2: had I mean, Becker has done some very elaborate costing
22:19
Speaker 2: that where the numbers get very large for the so
22:22
Speaker 2: called Golden Dome that Donald Trump has talked about for
22:25
Speaker 2: the whole of the US, and an awful loss of
22:28
Speaker 2: that money has been wasted. They talked a good game
22:31
Speaker 2: but didn't really pan out. Is an awful lot of
22:34
Speaker 2: this money just going to be wasted?
22:36
Speaker 3: I mean, yes, It's hard to say how much, though,
22:40
Speaker 3: because sometimes technology pans out. Sometimes you set out to
22:44
Speaker 3: go to the moon and you do it. But other times,
22:47
Speaker 3: you know, you set out to build orbital nuclear defenses
22:51
Speaker 3: and it just doesn't work. You spend you know, hundreds
22:55
Speaker 3: and hundreds of billions of dollars on it, and nothing
22:57
Speaker 3: gets in orbit and nothing works, and then you give
22:59
Speaker 3: up and walk away, and then you try again thirty
23:01
Speaker 3: years later, which is what we're doing around right now.
23:04
Speaker 3: Of course, that remains to be seen whether Golden Dome
23:07
Speaker 3: is going to be what it is being pitched as being,
23:10
Speaker 3: or whether any of the technology being developed for it
23:13
Speaker 3: will become real and.
23:15
Speaker 2: More useful for the rest of the economy. Because that's
23:17
Speaker 2: the other thing that has always said, is the technological
23:19
Speaker 2: spill overs.
23:20
Speaker 3: That's true. I mean, a lot of this stuff is
23:22
Speaker 3: fairly narrowly focused. It's hard to see, you know what
23:25
Speaker 3: an application for you know, a high energy laser would
23:27
Speaker 3: be you know, in my backyard, as much as I'd
23:29
Speaker 3: love to have one, you know, a space based.
23:32
Speaker 2: Because there's loads of money at not very many jobs
23:34
Speaker 2: and not very many civilian applications.
23:37
Speaker 3: Yeah, I mean exactly exactly, So you know, it remains
23:41
Speaker 3: to be seen. I think some of that will will
23:44
Speaker 3: become real and weaponized, and some of it will find
23:47
Speaker 3: its way into the arsenals of the US and China
23:51
Speaker 3: and Europe and other countries, and some of it will
23:54
Speaker 3: end up having civilian applications, but some large percentage of it,
23:59
Speaker 3: less than half, I would say, will just be on
24:02
Speaker 3: dead ends. And that's just kind of the nature of
24:04
Speaker 3: the game when it comes to developing defend technology.
24:06
Speaker 2: I guess in the end, if we never found out
24:08
Speaker 2: whether it worked or not, might even be a good
24:11
Speaker 2: outcome for humanity.
24:12
Speaker 3: I'd sign up for that, all right.
24:15
Speaker 2: So I guess I don't know if it's positive or
24:17
Speaker 2: not that we've concluded that it's not very good for
24:19
Speaker 2: the economy and may not work, but at least it
24:22
Speaker 2: costs a lot of money.
24:23
Speaker 3: When you put it that way, it doesn't sound great it.
24:26
Speaker 1: But do you want to know it also is expensive,
24:29
Speaker 1: or war is expensive, and ultimately, so much of these
24:32
Speaker 1: weapons is not just about this idea of prosecuting war.
24:35
Speaker 1: It's to actually deter war from happening in the first place.
24:39
Speaker 1: And so yes, there's almost this perverse incentive where you
24:42
Speaker 1: do see high defense budgets. You see a lot of
24:45
Speaker 1: money being wasted on, say a missile technology that doesn't work,
24:49
Speaker 1: only to be used later on in another application that
24:52
Speaker 1: does work. But ultimately all of this is trying to
24:56
Speaker 1: make it so that countries feel safe and protected, can
25:00
Speaker 1: deter aggression from happening, so we don't find ourselves in
25:03
Speaker 1: catastrophic war that can cost trillions and trillions of dollars.
25:07
Speaker 3: Yeah, and just on top of that, then if you
25:09
Speaker 3: look at the Cold War as an example, the absolute
25:12
Speaker 3: mind boggling number of nuclear weapons there were, and delivery
25:17
Speaker 3: systems and all just the crazy stuff that they came
25:20
Speaker 3: up with to conduct nuclear war. In the end, all
25:24
Speaker 3: of that sort of the purpose if you sort of
25:27
Speaker 3: buy into the theory behind it of making sure it
25:30
Speaker 3: never happened. And I guess some of the proof in
25:33
Speaker 3: the putting there is that as soon as the Cold
25:35
Speaker 3: War ended, a lot of those stack Biles just disappeared.
25:38
Speaker 2: Well, it strikes me we also felt secure for a
25:42
Speaker 2: lot less money when there was confidence in collective security
25:45
Speaker 2: arrangements like NATO, but that is another matter. Becka and
25:50
Speaker 2: Jerry thank you so much, Ques, thanks for listening to
26:06
Speaker 2: Trumpnomics from Bloomberg. It was hosted by me, Stephanie Flanders,
26:09
Speaker 2: and I was joined by Becca Wasser, Defense lead for
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Speaker 2: Bloomberg Economics and Jerry Doyle, Global Defense Editor for Bloomberg News.
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Speaker 2: help from Amy Keane and sound designed by Blake Maples
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