Have you braced yourself for the Pentagon “spending cuts” recently unveiled by Secretary of Defense Robert Gates? Don’t bother. Though many journalists used that term to describe the Gates budget, Gates himself conceded that “this is really all about a reduction in the rate of growth” in spending.
I’m sure Gates did his best, comparing the bang-per-buck of different weapons systems and dropping the ones that failed this cost-benefit analysis. But there’s a different kind of cost-benefit analysis, and if the Obama administration used it, we could actually cut defense spending. And, as a bonus, we would correct a national security strategy that is disastrously off course.
In economics there is something called a “collective action problem.” Suppose there’s a row of merchants, and all are bedeviled by a troublemaker who roams their storefronts, scaring off customers. All merchants would benefit from getting rid of the troublemaker, but it doesn’t make sense for any one merchant to bear the entire cost of the necessary policing. Collaboration is in order.
The collaboration can take various forms. In a shopping mall, merchants may split the cost of a security guard. In a sidewalk setting, security comes from the town’s police, whose costs the merchants share by paying taxes. Either way, the point is that, in the absence of such collective arrangements, no single merchant is going to assume the burden of fixing the problem — unless that merchant is willing to let the other merchants be what economists call “free riders.” In other words: unless that merchant is a sucker.
http://opinionator.blogs.nytimes.com/2011/01/18/cut-defense-spending-lead-the-world/?nl=todaysheadlines&emc=thab1
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