Future PLAN orbat discussion

Iron Man · Oct 25, 2019

AndrewS said:
Now you're attacking the person, not the methodology and framework he outlined below

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Actually, I'm questioning his qualifications vs that of the almost certain several dozen (hundreds?) of PhDs who deliberately choose NOT to use PPP over MER. As in, they considered using PPP over MER, weighed the pros and cons, and chose MER in the end. Then they laid out their reasons for the whole world, which I posted for you. I would venture to say that RAND, Jane's, CIA, DIA, etc. would all concur with what SIPRI laid out.

AndrewS said:
@Iron Man
Yes, SIPRI may have 22 PhDs on the payroll.
But as they publicly acknowledge, they simply didn't try to estimate how much cheaper military personnel and equipment is in China.
And we know this is much cheaper in China.

I would also say that RAND, Janes, CIA, DIA all use the Market Exchange Rate because they couldn't get an alternative.
But they all publicly acknowledge the Market Exchange rate is really flawed.

And yet you failed to point out that YOUR sources invariably say something to effect that using PPP is also inherently imperfect measure. This brings us to my acknowledgement that the true measure lies somewhere between nominal and PPP. Where, nobody here knows. Including you.

AndrewS said:
CSIS (where a lot of interesting Navy think-tank work goes) only just started a new project to try and collect China's military costs
That should result in military PPP exchange rates once they finish.

And based on the papers/treatises that I referenced previously, we can expect the military PPP rate to be MORE favourable to the Chinese Navy than using the consumer PPP rate.

One can always dream.

AndrewS said:
Given all this, I think we shall have to agree to disagree, and just have to wait for some definitive numbers to come out.

But I am certain that using the consumer PPP exchange rate is valid for use regarding the Chinese Navy.

Certainty is for the foolish. The intelligent prefer to reserve their opinion, indefinitely if needed.

FriedRiceNSpice · Oct 25, 2019

Iron Man said:
And yet you failed to point out that YOUR sources invariably say something to effect that using PPP is also inherently imperfect measure. This brings us to my acknowledgement that the true measure lies somewhere between nominal and PPP. Where, nobody here knows. Including you.

Likewise, SIPRI also mentioned that nominal spending is not an accurate measure for comparing how much actual military capability two nations can actually purchase. It correctly points out that most military spending is on non tradable goods and services, and are paid for in local currency and local prices.

Again, not arguing that using pure PPP conversion will give a very accurate comparison either, a true conversion rate will lie in between PPP rate and market exchange rate.

China is also unique in that it is one of the few non developed countries in the world to have such a robust technological and industrial base as well as fully indigenous and modern MIC. So while labor costs and wages are still in the range of middle income economies, it can still produce things that generally only high income nations could. This is what creates such a competitive advantage for China in the global economy. For comparison, using PPP for Indian defense spending would give a much less accurate assessment, as so many weapons systems and key components must be imported, which must be paid for in hard currency at market exchange rates.

AndrewS · Oct 25, 2019

Iron Man said:
Actually, I'm questioning his qualifications vs that of the almost certain several dozen (hundreds?) of PhDs who deliberately choose NOT to use PPP over MER. As in, they considered using PPP over MER, weighed the pros and cons, and chose MER in the end. Then they laid out their reasons for the whole world, which I posted for you. I would venture to say that RAND, Jane's, CIA, DIA, etc. would all concur with what SIPRI laid out.

And yet you failed to point out that YOUR sources invariably say something to effect that using PPP is also inherently imperfect measure. This brings us to my acknowledgement that the true measure lies somewhere between nominal and PPP. Where, nobody here knows. Including you.

One can always dream.

Certainty is for the foolish. The intelligent prefer to reserve their opinion, indefinitely if needed.

Here is the biography of the individual you're attacking as unqualified

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7 years with Pentagon OSD-CAPE supporting the cost-analyses
Apparently there are a total of approx 20 cost-estimators in OSD-CAPE
Multiple awards for Best Analysis from the International Cost Estimating and Analysis Association

If you're attacking him, you're basically attacking the Pentagon's own cost-analysis team, methodology, and also global best-practice in cost estimation.
And arguably, that individual will be heavily influencing the CSIS project (started 2018) to analyse Chinese weapons costs.

So again, can you find a flaw in the framework below, that consumer PPP is a better measure of Chinese military spending than the exchange rate?

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And furthermore, can you refute the logic that consumer PPP rates likely understates the ability of the Chinese shipyards to build low cost ships?

---
And I'll say this again, the DIA, CIA, RAND use the Exchange rate from inertia and because China wasn't taken seriously before.
When the CSIS military cost estimates are ready, I expect this will be used by DIA, CIA and RAND.

---
I'll reserve judgement when needed, but I don't feel any need to in this case, because the framework make sense from first principles and there is so much margin available, based on the costs that we've been able to see in real-life for naval warships in the US and China.

And that in the long-run, the nominal exchange rate should catch up to the PPP exchange rate anyway,
Do you accept or deny this assertion?

Remember that the original question is the future size and composition of the Chinese Navy.

AndrewS · Oct 25, 2019

FriedRiceNSpice said:
Again, not arguing that using pure PPP conversion will give a very accurate comparison either, a true conversion rate will lie in between PPP rate and market exchange rate.

The paper below argues that the military conversion rate should actually be beyond the consumer PPP rate.

Eg. China can produce even more equipment at a lower cost than suggested by the consumer PPP rate.

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Iron Man · Oct 25, 2019

AndrewS said:
Here is the biography of the individual you're attacking as unqualified

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7 years with Pentagon OSD-CAPE supporting the cost-analyses
Apparently there are a total of approx 20 cost-estimators in OSD-CAPE
Multiple awards for Best Analysis from the International Cost Estimating and Analysis Association

If you're attacking him, you're basically attacking the Pentagon's own cost-analysis team, methodology, and also global best-practice in cost estimation.
And arguably, that individual will be heavily influencing the CSIS project (started 2018) to analyse Chinese weapons costs.

So again, can you find a flaw in the framework below, that consumer PPP is a better measure of Chinese military spending than the exchange rate?

Please, Log in or Register to view URLs content!

And furthermore, can you refute the logic that consumer PPP rates likely understates the ability of the Chinese shipyards to build low cost ships?

---
And I'll say this again, the DIA, CIA, RAND use the Exchange rate from inertia and because China wasn't taken seriously before.
When the CSIS military cost estimates are ready, I expect this will be used by DIA, CIA and RAND.

---
I'll reserve judgement when needed, but I don't feel any need to in this case, because the framework make sense from first principles and there is so much margin available, based on the costs that we've been able to see in real-life for naval warships in the US and China.

And that in the long-run, the nominal exchange rate should catch up to the PPP exchange rate anyway,
Do you accept or deny this assertion?

Remember that the original question is the future size and composition of the Chinese Navy.

I'll let the PhDs do the talking, and will dismiss out of hand your baseless accusation that all these agencies use MER due to a reason as stupid as "inertia".

I don't need to refute your "logic" that PPP "understates" Chinese shipbuilding capability because that is nothing more than your funhouse mirror nonsense comparing ships that have no basis to be compared in the first place. Do you deny that oranges are orange and bananas are yellow? Do you?!?!?

As for the convergence of the MER and PPP, you would of course spindoctor the wrong way. Yes, I do accept that PPP adjustment will eventually DIMINISH down to the MER as Chinese cost of living etc. increases to the point of having to eliminate a PPP adjustment entirely.

AndrewS · Oct 25, 2019

Jura said:
Andy what do you mean here (no sarcasm)?

OK I'm tired at this Thursday hour, but curious (LOL as always)

If the US Navy were to double procurement of all their weapons systems, the cost only increases by 78% rather than 100%.
It assumes each unit still costs the same to produce, but there should be a cost saving because they are buying more.

A couple of points come from this, not all relevant to the topic.

1. It helps explain how the US Navy is disproportionately bigger and more powerful than the navies from UK/France/Japan - which have defense budgets at least 12x smaller.

2. If this we apply this to scenarios where:
a) the Chinese navy aims for parity with the US Navy
versus
b) the Chinese navy aims for 1.5x US Navy or 2x US Navy.

If China has an economy twice the size, it helps quantify that the military burden is easier to carry.

AndrewS · Oct 25, 2019

@Iron Man

All those 200 Phds are going to have to change and start using PPP as well.

The latest is below from Australia (1st October 2019). It looks like the first published analysis of Chinese military costs, and their military PPP equivalent.
And Australia has a very keen interest in determining what the future Chinese military will look like.

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You're going to have to argue with him as well, and then the CSIS report when that is released

FriedRiceNSpice · Oct 25, 2019

Side note, PHD in non STEM field is actually a rather weak credential. Especially those econ PHD working for think tanks, non profits, etc. If they were any good they'd be working on Wall Street or corporate, not the SIPRI. The ones at SIPRI are there because they failed to get a real six figure salaried job doing real work. This may sound conceited, but it's the truth.

Jura The idiot · Oct 25, 2019

AndrewS said:
If the US Navy were to double procurement of all their weapons systems, the cost only increases by 78% rather than 100%.
It assumes each unit still costs the same to produce, but there should be a cost saving because they are buying more.

A couple of points come from this, not all relevant to the topic.

1. It helps explain how the US Navy is disproportionately bigger and more powerful than the navies from UK/France/Japan - which have defense budgets at least 12x smaller.

2. If this we apply this to scenarios where:
a) the Chinese navy aims for parity with the US Navy
versus
b) the Chinese navy aims for 1.5x US Navy or 2x US Navy.

If China has an economy twice the size, it helps quantify that the military burden is easier to carry.

Andy how exactly did you get "78%" in the context of Yesterday at 5:15 PM

AndrewS said:
Just a short backtrack to economies of scale.

The GAO have helpfully collated the R&D and Procurement costs of major Navy acquisition programmes.

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If I look at the 2017 report, it is:

R&D Total: $61B
Procurement Total: $241B

Given fixed R&D costs - a doubling of procurement would result in a cost increase of 78% - assuming each unit costs the same.

But twice as many units are being purchased, so we can actually expect additional cost savings.

I mean there're programs which balloon up to the Nunn–McCurdy level,

so I'm unable to grasp what "cost savings" you're talking about using your link

(which presumably is

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since you "look at the 2017 report");

as before, no sarcasm, I'm interested to see your point

Jura The idiot · Oct 25, 2019

linking for those who had no idea what I was talking about Oct 13, 2019

Jura said:
inside
there's a tidbit about "parity with the US Navy" well it's a question what the USN will exactly do to ever go beyond the Burkes (while getting rid of Ticos as soon the Pentagon can:
Once again, the US Navy looks to scrap its largest combatants to save money
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dated March 18 of this year);

the second most expensive item under 2020 long-term shipbuilding plan is over 100b for 61 imaginary Future Large Surface Combatants which is kind of 'uncovered cheque' issued by those who may be gone tomorrow; CBO: Navy’s Next Nuclear Attack Submarine Could Cost $5.5B a Hull
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is the most recent on this

so what may actually happen, with 1t and growing Fed deficit and so on, is the USN using a shrinking number of Burkes during decades to come

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Future PLAN orbat discussion

Iron Man

Major

FriedRiceNSpice

Captain

AndrewS

Brigadier

AndrewS

Brigadier

Iron Man

Major

AndrewS

Brigadier

AndrewS

Brigadier

FriedRiceNSpice

Captain

Jura The idiot

General

Jura The idiot

General