How do you Stop the Arms Race? By Starting a New War, for Instance
There is a good rule that you should always be careful when extrapolating your data, especially over the long term. And there is an even better rule saying that you should never, never extrapolate an exponential growth. The uncertainty in the data of an exponentially growing curve increases exponentially, too, and that makes your extrapolation meaningless very soon.
But, in the figure above, they extrapolated an exponentially growing curve for the military expenses of the US and China over more than 30 years! The origin of that curve above seems to be the RAND Corporation. I couldn’t find the original source, but it has been reproduced in the blog of the Wall Street Journal and on Zero Hedge.
It looks like someone seriously proposed this extrapolation. But consider a few numbers: according to the chart, by 2050 the US would spend more than 20% of its present GdP for the military! (it is now about 3%). It might be possible if the US GdP were to increase in proportion. But, from the graph, they assume a growth of nearly a factor of 5 (from ca. 600 billion dollars, today, to 2.9 trillion in little more than 30 years. It means that the GdP should double at least twice in 30 years, that is, the US economy should grow at the rate of 6% (twice the current rate!) every year for the next 30 years. Otherwise, the US government would bankrupt itself even faster than it is doing now.
Now, you might want to dismiss this graph as one of the many silly forecasts that are part of the everyday chat on how this or that sector of the economy is going to grow — and therefore everyone should invest on it.
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