The Cato Institute calls for a 50% cut to the U.S. military: http://www.csmonitor.com/20...

Expand full comment

To be clear, I didn't mean that the military recruits substantially from the less productive half of the American population, I meant that presumably it would be the lesss productive half of the US military that would be fired/attritioned out of the military in Robin's proposal.

Also, I don't think I reasonably implied that the military strongly competes with prisons and mental institutions for its recruits. Quite the contrary, I mentioned the latter two to illustrate how stark the options are for more boundedly rational citizens: folks who have trouble maintaining the economic planning and foresight necessary to maintain an apartment, save for retirement, or have a good work performance if they face penalties no more severe than fire-at-will. I suspect we'd have a consequentially better society with a stronger (but opt-outable) paternalist structure. The military currently seems to me to be the least extremely limiting/stigmatizing of the three public sets of institutions that provide relatively strong paternalism for adults that need it.

Expand full comment


The military is actually reasonably selective, and while it does recruit substantially from the bottom half (although for only a minority of its headcount) entrance requirements largely exclude the bottom third, so it's not strongly competing with prisons and mental institutions.

Expand full comment

Robin,The military is also a place where more boundedly rational people can have simpler environments in which to operate, in a society that doesn't seem to much fund those programs otherwise (the other spaces are prisons and mental institutions). Something to keep in mind when halving military spending: we may have to do something with that less productive have other than allowing them to increase social risk as they operate unmediated in the civilian population.

In similar vein, I think the military's strongly deviant benefits and job security might be capitalists buying out violent but economically unintelligent people, in the similar way that highly paid legal work for law firms mostly to protect against other lawyers might be capitalists buying out excellent arguers/propagandists who also have limited economic aptitude or interest. May also be a factor to be considered when making adjustments to size of the military population or its benefits.

Expand full comment

A lot of unnecessary spending in the military: bands, ceremonies, General's secretaries, government employees hired to do nothing except take a pay check. Sure not a lot of money however if added up I bet it could make a difference - how can we get people in power to take a look at this?

Expand full comment

Whoops, sorry about that. It's here.

Expand full comment


I think you're missing part of the point. You've got the cart before the horse.

If you take a typical American two car family, you can easily make an economic/financial case that cutting their car costs in half will be of major economic benefit, especially over the long run. You can also point out that it's not as difficult as they might think to only be able to use one car and perhaps rent a car for specific situations that absolutely require a second car, such as one driver needing to drive out of town for a long trip.

However, you can't start with "What if we cut your car expenses in half?" and then expect them to see the "obvious" benefits to losing the second car. You have to start by convincing them that they're fine with one car. Once they're ok with that idea, you can easily convince them to cut their car expenses in half, because at that point it will make sense to them.

In a similar fashion, you'll have to convince the American people that it's just fine for the US to not be in control of what happens militarily outside of North America. Convince them to not demand we do something the next time some dictatorship invades someone else. Convince them that it's ok if China, or Iran, or North Korea, takes over whichever neighbors it wants to. Once you've accomplished that task, it becomes a simple matter to cut the US defense budget down to the EU level.

The reason for current US military spending isn't just economic and defense benefits for the US, although those do exist. The reason is what US voters expect the US to do with it's military, which is a much larger role. Change the expectations and the budget can be easily cut.

You can't change the expectations of the voters by cutting the budget in half. You have to cut the budget in half by changing the expectations of the voters. That task is of course complicated by the possibility that the voters may prefer whatever you want to call the utility they get when the US is a lone superpower to the utility of the smaller federal budget.

For an extensive and detailed analysis of where we are and some of the near-future possibilities in US military strength and relations from a world economic and social standpoint, I'd suggest "The Shield of Achilles", by Philip Bobbitt.

And for the record, there are two adults and four children in my household and we do fine with one car in a semi-rural area. :)

Expand full comment

Buzz, state pension plans are a combination of transfer and forced saving. The forced saving has little long term effect, as people can compensate via other savings choices. The transfer is hard to evaluate, as it is not clear what would measure success for them.

Expand full comment

Who cares whether it would be "Hansonian"? What matters is whether its effects would be good. Robin's a very clever chap, but I don't see any reason to think he can pronounce authoritatively on that question. (And I bet he doesn't either.)

Expand full comment

Sorry. But you could end the argument with your authority. Would a cut in SS benefits be Hansonian?

Expand full comment

J and Buzz, this is not the place to argue about social security.

Expand full comment

Those are some pretty strong words. Lying? And you know that based on what, exactly?

Feldstein could be wrong. But lying? I don't think so.

Feldstein's paper is available at NBER.

Correct me if I'm wrong, but the SS "surplus" is not anywhere near 1/2 of SS revenues. Thus, if we cut those revenues in half, with a corresponding cut in benefits, we'd still be ahead of the game, economy wise.

Expand full comment

Buzzcut, I believe you have listened to propaganda about SS, propaganda that has little relation to reality.

Follow the money. When SS taxes are collected, the US government sells bonds that the SS money buys. The US government then spends the money. So, what would happen if we stopped collecting SS? The US government would either have to cut back its spending a whole lot, or else it would have to issue regular bonds to pay for the spending, or it would have to raise taxes. You are looking only at the first case. If government spending was cut back with no reduction in services, then everybody would be happy. But if the government issued more bonds to replace the SS money then the result would be about the same as we have now, except that we would have to persuade people to buy the bonds instead of just tax them. If it was new taxes then it would particularly hit the people who pay the new taxes who might not be the same as the ones who pay SS now.

People talk like SS is in financial trouble. It isn't particularly, except for the problem that the US government might choose to default on its SS bonds. The government has already spent the money and might choose not to pay it back. That's the problem.

And if we particularly cared about SS, the obvious solution is to instead buy bonds from countries whose credit is better than the USA, countries that we can be confident will pay their debts. And we could require the USA to start paying back existing SS bonds so we can invest the money in safer places. But the issue isn't how to keep SS safe, the issue is how to fund the US government this year.

Marty Feldstein was, basicly, lying. If SS had been privateered in 1980 and if government spending had been cut back proportionately with no reduction in services, then yes, the US economy would probably have been 50% larger by the mid 1990s than it was. And if Marty Feldstein had spent those years working three fulltime jobs each of which paid as well as his current job, he would have been more than twice as rich as he was not counting non-labor income, kickbacks, bribes, etc.

Expand full comment

g, regarding Social Security, regarding the payroll tax and the employer portion, I think that standard economic theory would tell you that, if it were eliminated, the money would go to employees in the form of higher pay. I would extrapolate that that would increase consumption, which would go directly to the bottom line of GDP, minus savings and imports.

I don't doubt that there would be redistributive effects amongst the elderly. Yes, stockholding retirees would make out way better than non-stockholding retirees. In that sense, perhaps it is slightly different than the Hansonian health care example, where pretty much everyone would have the same probability of being better or worse off (50-50, right?).

Don't forget about pensions, also. Even if retirees don't own stocks directly, many recieve pensions that benefit from a rising stock market. For example, do you think that a GM retiree would rather have a lower SS check in return for getting a GM pension? Those are the kind of tradeoffs that might be possible with a Hansonian cut in SS benefits.

Again, retirees as a group COULD very well be better off by cutting social security benefits in half. I think that that is the interesting take away. Don't get caught up in the status of the individual retiree. And keep in mind that I said "could".

Also, if I was incorrect regarding retirees being the demographic with the highest amount of wealth, they still are a very wealthy group. Anything that increases returns on investments like stocks and bonds are going to make retirees even wealthier.

Remember that Martin Feldstein projected that, if Social Security were privatized in 1980, by the mid 1990s the US economy would have been 50% larger than it was. The deadweight loss from the payroll tax is huge.

Expand full comment