Featured on the homepage is Charles Michael Andres Clark’s response to a recent column by David Brooks. Clark points out that long-term fiscal forecasts, which debt scolds cite with as much confidence as alarm, are notoriously unreliable, because they assume that the future will be an extension of current trends.
Economists call this the “ergodic axiom.” But all economic history since the advent of capitalism shows that we live in a nonergodic world. This, by the way, is why most economists didn’t foresee the financial meltdown: housing prices had never plunged before, and this was taken to prove they never would. When social scientists make predictions, they often hedge them with the Latin phrase ceteris paribus—“all other things being equal.” But in the long run all other things are not equal. The variables change. Circumstances that are unforeseen and unforeseeable render our old projections moot, or current trends hit a natural limit that the projections disregard.[...]
If people paid more attention to the performance record of past long-term forecasts, they’d take current ones less seriously, or at least more cautiously.
Clark also challenges Brooks’s suggestion that if the United States chooses to spend less on its military and more on its entitlement programs, it will have chosen “decline.” As Clark points out, our military budget is bigger than the next twelve largest military budgets combined. We could spend much less without forfeiting our military superiority or jeopardizing our security.
Brooks may be right that most Americans are unwilling to pay for America to remain the world’s policeman. I suspect most Americans are quite willing to pay enough for the country to defend itself…. Budgeting is about choosing what we value most, and, pace Brooks, it is surely a good sign if Americans decide to stop fighting wars we don’t need to fight so that our government can afford to take care of the elderly and the poor. As Dwight Eisenhower (a Republican) put it, “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.”