TLDR;
The global arms race has reached unprecedented levels, with nations spending record amounts on their militaries despite facing economic challenges. This video examines the factors driving this surge in military spending, including the conflicts in Ukraine and the Middle East, the rise of China, and the resulting security dilemma. It also explores the economic consequences of this arms race, including rising debt levels, strained budgets, and the potential for a devastating global economic shock.
- Global military spending reached a record high of $2.7 trillion in 2024.
- The United States, China, and Europe are leading the way in military spending increases.
- The arms race is driven by geopolitical tensions, the need to replenish stockpiles, and technological advancements.
- The economic consequences of the arms race include rising debt levels, strained budgets, and the potential for a global economic shock.
- The security dilemma, where one nation's defensive measures are perceived as offensive by rivals, is fueling the arms race.
Introduction [0:00]
In 2024, global military spending reached a record $2.7 trillion, even as nations grappled with pandemic debt and economic instability. This video examines why countries are preparing for a war that they seemingly cannot afford, focusing on the escalating arms race and its potential consequences.
The Arsenal of Democracy [0:25]
The General Dynamics factory in Scranton is now operating at wartime pace, producing nearly 40,000 artillery shells monthly. This surge in production is driven by the conflict in Ukraine, which consumes vast amounts of ammunition. The factory is working to replenish American stockpiles, but the scale of modern warfare makes it a losing battle, with each shell representing a significant cost to the average family.
The Trillion-Dollar Commitment [1:35]
In 2024, the United States spent $886 billion on defence, exceeding the GDP of most nations. Emergency supplementals, such as the $30.6 billion for ammunition stockpiles and $113 billion for foreign aid, highlight the true scope of America's military commitment. The US is currently funding three major fronts: Ukraine, the Middle East, and a technology race with China. Interest payments on the national debt are now rivalling defence spending, leading to "uncharted fiscal territory".
The Dragon's Ascent [2:45]
China's official military budget for 2025 is $296 billion, with sustained annual increases of 7.2% for over a decade. Western intelligence estimates suggest the real figure is closer to $450 billion, accounting for dual-use technologies and nuclear modernisation. China now possesses the world's largest navy and is developing hypersonic weapons, triggering billion-dollar countermeasures from the US and creating an expensive action-reaction cycle.
Europe Rearms [3:30]
Germany is significantly increasing its defence spending, aiming to surpass NATO's 2% GDP target and committing €100 billion for military modernisation. This shift marks a turning point in German history, making it the world’s fourth-largest military spender. Poland, spooked by Russian aggression, has increased military spending to 4% of GDP, ordering tanks from South Korea and the United States.
Neutrality No More [4:40]
Traditionally neutral nations like Sweden and Finland have abandoned their military restraint, with Sweden joining NATO and increasing defence spending by 40% in two years. Sweden has reintroduced military conscription and civil defence programs, even updating its "If Crisis or War Comes" booklet for the first time since the Cold War. Switzerland, known for its neutrality, has authorised $6.5 billion for F-35 fighter jets and is modernising its Alpine fortifications.
The Debt Trap [6:45]
Japan's military budget has reached its largest since World War II, driven by concerns over China, despite a debt-to-GDP ratio of 260%. The COVID-19 pandemic has financially crippled nations now racing to rearm, creating a global fiscal crisis. The United States faces an unsustainable budget deficit, with federal debt growing rapidly, while European economies struggle with the aftermath of COVID-19 and rising energy costs.
Creative Accounting [8:36]
Italy is increasing military expenditures to meet NATO's 2% minimum threshold, even considering reclassifying a bridge construction project as a "national security expenditure". The United Kingdom, grappling with Brexit and inflation, has entered a 50-year nuclear submarine deal with Australia, financed through borrowing. Australia is spending billions on nuclear submarines, a deal criticised as "the worst deal in all history".
The Brutal Economics of Modern Warfare [10:46]
Western nations have provided over $200 billion in aid to Ukraine since 2022. Modern weapons systems are incredibly expensive, with hypersonic missiles costing over $14 million each and stealth bomber programs projected to cost hundreds of billions. The F-35 fighter jet costs $80 to $109 million per jet, with lifetime maintenance reaching $1.58 trillion.
The Taiwan Scenario [12:01]
A war over Taiwan could trigger a $10 trillion global economic shock, disrupting the world's semiconductor supply. War games suggest that even if the U.S. Navy holds the line, it would suffer significant losses. The Brookings Institution warns that China's military gains have made the outcome "inherently unknowable," with everyone losing, especially Taiwan.
The Security Dilemma [12:52]
Despite the risks, Western countries continue to arm themselves, driven by the security dilemma where one nation's rearmament prompts rivals to react. Putin's invasion of Ukraine has spurred the biggest military buildup since the 1930s, with countries like India, the Philippines, and Japan increasing defence spending. For smaller NATO states, the 2% GDP pledge can strain their economies, with some spending more on defence than on education, health, and infrastructure combined.
The Cost of Modern Warfare [14:32]
U.S. defence spending could reach $1.7 trillion annually by 2034, potentially doubling the federal fiscal gap. In Ukraine, artillery crews can expend $50,000 in ammunition every minute. Modern weapons systems, such as hypersonic missiles and AI-integrated air defence systems, are incredibly expensive. Cyberwarfare also presents a challenge, with low-cost offenses requiring sky-high defenses.
The Inevitable Collapse? [16:07]
Manufacturing bottlenecks and control over rare earth minerals further complicate the arms race. History shows that excessive military spending can lead to collapse, as seen with the Soviets in Afghanistan and Britain after WWII. A Chinese invasion of Taiwan could cost the U.S. over $1 trillion annually, not counting the global supply chain collapse. The security dilemma threatens the economic foundations of civilization, raising the question of whether nations are preparing for victory or mutual destruction.