Thursday, August 16, 2012

The hole in Robert Samuelson's head*

A true "public good" is a strange beast. It is among other things, non-rivalrous, meaning that one person's use of the good does not reduce the amount of the good available for another person to use (unlike a hamburger).

So, if more people consume the good than before, it doesn't reduce the amount of the good available for use by the previous consumers.

Thus, the quantity of the good does not have to rise in proportion with the population in order to keep per-capita consumption constant.

National Defense is often given as an example of a pure public good. Our nuclear stockpile does whatever it does for each of us no matter how many of us there are. Our aircraft carriers do whatever they do for each of us no matter how many of us there are.

Thus, we should not automatically fear/rail against policies that might cause real defense spending per capita to fall. What really matters is total defense spending.

This brings me to Robert J. Samuelson in today's WaPo. In describing a proposal to limit growth in defense spending to the rate of inflation after 2023, he writes, "Defense cuts could verge on unilateral disarmament".

People, can I get a YIKES? Thank you.

Now, it may be that future events would make us want to collectively consume a greater level of defense than we do now in real terms. It is also in my opinion foolish to claim that anyone today has any influence on how the Congress of 2023 will allocate our money.

But defense spending could fall in per capita terms (or in percentage of GDP terms) without reducing the amount of defense we have.

In fact, spending could fall in per capita terms and we could all be better defended!

Total real spending could rise while per-capita real spending falls and we'd each have more defense to "consume".

Note that this is true of any other government provided public good and partially true for any government provided partially public good (goods that are semi-rivalrous, like roads).

The "any fall in real spending per capita is a cut" meme is just not necessarily true, especially when it comes to government provided goods.

Robert J would be very lucky to get the "gentleman's C" in Econ 101.

*In the print version of the WaPo, Samuelson's piece is titled "The hole in Ryan's Medicare Plan", which is what inspired the title of my post.


Tom said...


(You're welcome). But -- yikes! (That one was personal.)

The US could cut Defense Spending by 90% and still be nowhere close to disarmed. Gary Johnson plans to cut defense spending by 43% and claims that reduces the US to the spending levels of 2003. I don't recall feeling inadequately defended in 2003 (or earlier, for even less). That show one trouble with the concept of "public good" -- some of us are getting a lot more of it than we want.

Richard said...

You can also let your nato allies take care of their own stuff more. No point US still has gigantic basis all over the western world.