Arms race is almost an apt term for this. I think "Red Queen's race" is better, where everyone has to spend like crazy just to stay where they are.

Does anyone think this kind of investment is a good idea? Pretend you run a pension fund and you are hearing a pitch from a hedge fund.

"Ok, you should invest hundreds in millions of dollars in us. There are 120 firms like us, and about 10 make a profit. The rest lose between 5-30 million dollars a year. You have to spend the 100s of millions to even have a chance at being one of the ten. If you cut back you will almost certainly lose 10s of millions a year. We pay the people that run the show $3-5 million a year, so any small profit will go to those people. The only reason we all don't run huge deficits is we are subsidized by taxpayers."

Sound good?