E4 - How the Pentagon Buys Stuff
The Merge
Why Shouldn't We Be Predicting the Future?
When we estimate weapons systems costs, you always have to adjust for inflation or the change in the purchasing power of the dollar over time. And so when you look at a fighter aircraft, it's not 3%. Right? The prices tend to grow between 7 to 11% per year. So every year, the cost of like the same quality type of fighter aircraft is supposed to increase roughly about 10%. At like a 10% price increase per year, you're going to get a price doubling every 7 years. It took me a long time and a long journey, kind of understand the physics of the Pentagon and how that worked.
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