Tweeted to distraction

The Trump administration has submitted its 2017 budget proposal. It is steeped in controversy including steep cuts in support for the EPA, Department of Education, The CDC, and the NIH.  Everyone's ox gets gored in this budget. We can quickly get into the weeds on this, discussing the specific merits of individual line items. While I believe that the wisdom of cutting funds for specific entities such as the CDC or NIH is simply more than dubious, these micromanagement decisions draw attention away from the bigger issues; that being why we are having this discussion in the first place.

The Federal budget is a mess and the dysfunction in Washington is a direct result of the structural issues with Federal spending. The historical perspective of across the isle collaboration existed because there was sufficient discretionary spending within the Federal budget whereby deals could be struck with specific financial resources linked to keep everyone happy. That has gone away because most of the money in the federal budget is spent outside the control of Congress. The net effect of the explosion of mandatory spending is there is no real reason to collaborate and every reason to play legislative chicken when there are fewer and fewer goodies which can be allocated and shared.

The projections of future growth of mandatory spending paint a rather bleak picture if one thinks that future collaboration across the isle are any more likely than the recent past. Mandatory spending is increasingly crowding out discretionary spending. The fastest growing segments of the overall budget are mandatory spending on entitlements and interest on the debt.

We have dodged this over the past 10 years for two reasons. First, we have run huge budget deficits which have allowed for both substantial growth of mandatory spending and support of flat discretionary spending. Second,  interest rates have hovered around zero which has allowed for growth of debt without substantial growth of interest payments.

The only discussions which are happening regarding spending cuts are touching upon the margins of the discretionary spending, which is less than 1/3 of total spending. We are likely to have huge political fights over these marginal items now, which in the not so distant future will be entirely irrelevant since growth in mandatory spending will all but crowd out everything that is truly discretionary.

The party is over. Interest rates are increasing meaning the carrying cost for the debt we have accumulated will, along with growth in Medicare costs, decimate discretionary spending. If the conflicts over cutting at the margins of the Federal budget seem nasty this year, just wait until the out years when the pie gets even smaller. Adjusted for inflation, discretionary spending in 2016 is smaller than any year since perhaps 2003. We could perhaps maintain flat discretionary spending with substantial tax increases for the short term. However, this approach runs a real risk of decimating any prospect of real economic growth and besides, it is only a short term work around. We will need to address the mandatory spending piece. There is no way around this.

Unfortunately, entitlements are not politically addressable. No one wants to talk about them. Smart people become blind when the subject is raised. Smart politicians remain in office by avoiding the conversation. The press corps are populated by smart and innumerate people, at least the ones who are employed.

I for one am not interested in hearing about anyone's specific beef about any specific budget item which will be slashed without a concurrent recognition that the inability to direct financial resources to good investments is part of a larger train running down a track to nowhere. Upset about federal $'s for the EPA - what about the bigger picture? Fill in any issue with any agency; NIH, Education, Agriculture... It does not matter whether you win the fight this year if you are blind to the inevitability of mandatory spending crowding out the remainder of the Federal budget.

Dealing with uncertainty and predicting the future

The NYT this moring published a piece by John Lancaster titled "The major blind spots in macroeconomics". It featured a talk given by Andrew Haldane, the Chief Economist of the Bank of England (Haldane talk), "The Dappled World". The the title of this work in turn was borrowed from work of Nancy Cartwright:

One of the potential failings of the economics profession, I will argue, is that it may have borrowed too little from other disciplines - a methodological mono-culture. In keeping with this spirit, the title of my lecture is itself borrowed. In 1999 Professor Nancy Cartwright, a philosopher of science, published a book with the title The Dappled World: A Study of the Boundaries of Science (Cartwright (1999)). This quote captures its essence:

“Science as we know it is apportioned into disciplines, apparently arbitrarily grown up; governing different sets of properties at different levels of abstraction; pockets of great precision; large parcels of qualitative maxims resisting precise formulation; erratic overlaps; here and there, once in a while, corners line up but mostly ragged edges; and always the cover of law just loosely attracted to the jumbled world of material things.” 

The criticism of the macroeconomics and of science in general seems to have substantial relevance to medicine. Dr. Cartwright's description of the apportionment of disciplines and erratic overlaps describes my world.

Haldane's speech also highlights the abject failure of macroeconomics to  predict the near catastrophic economic events of the early 21st century. The models employed all failed to identify the 2008 downturn. This was especially disconcerting since the major purpose of the field is to anticipate these events. Macroeconomics has a problem with dealing with uncertainty. However, they are not alone in having to deal with uncertainty.

Medicine has a similar set of issues but we have elected to take a somewhat different but perhaps equally flawed approach. Whereby mainstream economics has taken a somewhat pollyannish approach and consistently fails to predict economic catastrophes (or near catastrophes), we in medicine make them all the time, even when they are not likely to happen. We do deal with different frequencies. There are lots of people in the word and for each of us, we will ultimately deal with our own personal catastrophes. Major depressions affecting large populations occur very infrequently when compared to major health events affecting single humans.

Economists are not called upon to predict the financial fates of single humans but those of us in the health care world are called upon to make predictions about the near term and longer term fates of individuals. However, whether looking at populations or single individuals, we are saddled with the same broad issues: uncertainty and inherent problems with predicting the future.

It seems that economist tend to err on the side of optimism and are not able to consistently predict low frequency catastrophic events. On the other hand, physicians tend to err on the side of over-predicting the likelihood of individual catastrophes. We do have the advantage (disadvantage) of being always right over the longer term for any given individual. However, timing is important. Devoting resources now for a potential catastrophe which may occur tomorrow or 50 years from now has real costs. There are likely different decisions we all would make if we knew the future better that we now know.

What are the prospects of knowing the future better? I think they are likely pretty high but this improved knowledge will require both more population based data and a broader understanding of what frequencies mean. This data will be meaningless to people unless they are able to view information through a different and quantitative lens. I also think this will require some degree of reorganization of how we view expertise. The "dappled nature" of science and health care delivery creates barriers to understanding and interpreting the data needed to make sense of a complex and uncertain world.  That may be the larger challenge we face.

Something is not right...

Dr. Pat Frank (Unusual climate change talk)