Geraci on NATO Spending: With the Same Money, China Built 40,000 Km of High-Speed Railways

July 5—Italian economist Michele Geraci has calculated what it would mean for Italy to spend 5% GDP for “defense,” as decided at the recent The Hague NATO meeting—provided that member countries really do what they committed to.

“For those who love numbers (no one in government), I would remind you that 5% of GDP is equivalent to $1 trillion over 10 years.” (When fully implemented, formally in 2035. However, from now on, spending should increase from 2%, so that in the course of the present decade it will be over a half-trillion on average.)

“This figure, $1 trillion, is what China spent in 10 years to build 40,000 km of high-speed rail (more than half at >300 km/h), or the total of all Silk Road investments in Asia and Africa, and, of course, half of our GDP.

“I generously assume a fiscal multiplier of 0.5 (pure gold) every year; the debt grows by 5, and GDP by 2.5. At the end of the day, the debt will grow by $1 trillion and GDP by $500 billion. So, we will need to find $500 billion in new taxes. $50 billion per year.

“Financial suicide as well as military suicide, to defend ourselves from an imaginary enemy without whom Rutte and Meloni would have no political capital.”