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Ceteris Paribus

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 didnt 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 phraseceteris paribusall 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 ofpastlong-term forecasts, theyd 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 worlds 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 dont 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.

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While I don't necessarily disagree with Charles Michael Andres Clark, I think one of the problems for "deficit hawks," centrists, or even liberals like me is that while everyone who knows the least thing about federal spending knows it is unsustainable, there is no hint (at least none that I am aware of) of a Democratic plan to deal with that fact. I heard a prominent Democrat recently saying there was not a problem with Medicare and Medicaid, but rather with rising health care costs (a point Clark also makes). That may be true, but if there is no way to solve the problem of rising health care costs, then for all practical purposes, there is indeed a problem with Medicare and Medicaid.

The military problems/expenses now seem to be Seal strikes in Pakistan. And Yeman, Libya, Algeria, Mali et al ...make the expenses of armored divisions, carriers, nuclear bombers/missiles a bit much.

Although I still like reading him, David Brooks has taken to lusting after Big Ideas. The quote from Oswald Spengler was telling, wasn't it? Nevertheless, he is right about one thing: This country can't afford both a military that would satisfy its chickenhawks and health care that would satisfy the promises of Obamacare. At least it can't right now, today, which is when congressional decisions are made.It is telling that Europe does not spend as much on health as we do but seems to get better results. Nevertheless, we are Americans, so we must ignore how Europe does it. We will pay more, but Obamacare promises more Europe-like results. That is the Democrats' choice, and it will be increasingly costly.We haven't won a war in a long time, apart from the limited war with limited goals that President George H. W. Bush pulled off, to the hisses and boos of his party's military thinkers, who are good at producing unsatisfactory outcomes (Iraq) and blaming other people for them. David Brooks would have a hard time convincing me that the future of our military lies in more spending. What we need is military thinking based on something more likely than the Unconditional Surrender formula, applied willy-nilly to failed states like Afghanistan and non-state criminal conspiracies like the various Al Qaeda franchises. Before we sink Brooksian amounts of money into arms and armies, we ought to think about what victory, realistically, would look like when you are chasing heavily-armed mafias around various world outbacks.It isn't choosing "decline" to choose not to pay for more endless engagements resulting in things like Iraq having the world's most ostentatious U.S. embassy near the remains of the tower of Babel. It is wisdom to stop doing what we've been doing and think about what we should be doing to get different results. And yet, even as we see all that, we have Israel expecting us to back up its tough talk against Iran, Syrians asking where the hell we went and France getting into Africa over its head and looking for a bit of this and that from us. All of this, of course, against the background of a failed state with nuclear bombs on the verge of getting long range missiles, or one of the defense intellectuals' favorite Doomsday Scenarios coming to life on the Korean peninsula.The future may not be as bad as current trends, as Charles Clark says. On the other hand, it could be worse.

Clark is a good Keynesian in refusing to predict the future. Keynes said it is impossible to make long-range predictions with any degree of certainty.Compare Krugman's recent column on efforts to cut back entitlements because of big problems with them in the long term, problems which can be eliminated by wise fiscal policy in the short term..http://www.nytimes.com/2013/01/18/opinion/krugman-the-dwindling-deficit....

"I suspect most Americans are quite willing to pay enough for the country to defend itself..."People also do not understand the value options companies such as Lockheed Martin are able to deliver. For example the three Muslim civilians Mr. Brennan assasisanated yesterday were killed with a missle which costs about $70k per use. The same is true of the 8 or so Muslim civilians he assasinated Saturday - although in that instance I believe Mr. Brennan chose to assasinate them with 2 separate missles but the value relative to, for example, the American invasion of Packistan in May 2011 is clear.

David Nichols writes: "If there is no way to solve the problem of rising health care costs, then for all practical purposes, there is indeed a problem with Medicare and Medicaid." Yes, if there were no way to solve the problem of rising health-care costs.... But there is: we can adopt the kind of cost controls that make health care more affordable in other developed countries, where health outcome are as good or better. How long it will take for this to become politically feasible is a different question. I suspect the answer is: sooner than most Beltway insiders think. As Clark says, if health-care costs continued to rise at their current rate, we would eventually be spending most of our incomes on health care. Americans have been willing to spend more on health care only because they believed that the quality and availability of health care was improving. When we can't spend keep spending more, the question will be: Do we spend less for worse care, which is what keeping our current system will require? Or do we adopt and adapt the kind of system that is already offering care that is better, or at least as good, for less? Given that choice, I think we will eventually do the rational thing, despite the entrenched interests that oppose it.