Alan Greenspan's Memoir
Amazon updated their placeholder with a title, cover image, release date, book description, et cetera for Alan Greenspan's memoir. It will be out on 17 September 2007. It is only going to be 640 pages long. Given the importance of the position he will in all probability come to occupy in the history of monetary economics and U.S. economic history, something more on the scale of Henry Kissinger or George Schultz was more in order. I guess I shouldn't judge a book by its heft though; I will wait and see. Nonetheless, one can imagine the pallet-loads that will be generously distributed about bookstores on the day of release. It's going to be like the last Harry Potter novel for political junkies.
The title, The Age of Turbulence, is odd. To my politically addled ear it reads like Robert Brenner assisted Eric Hobsbawm in bringing his Marxist trilogy on the Nineteenth and Twentieth Centuries (1789-1991) up to date.
Global Healthcare Federalism
I'm in favor of socialized healthcare (or single-payer or however you want to spin it), but every now and then I freak out and wonder if maybe nationalizing healthcare in the United States might be catastrophic and set the entire Western medical establishment on the road to serfdom. Here is my quandary.
I really do believe that the healthcare systems of, say, Canada and France are superior to that of the United States and I believe that even a top-line consideration of the statistics bears this out. But the healthcare establishment is fully globalized at this point. The students, the scientific and trade journals, the symposia, the patterns of professional association, the evolution of standards of care all demonstrate a unified, or near unified intellectual community. The economy of healthcare, lake all other economies, is global. The United States remains the biggest market for most pharmaceutical companies, but increasingly they see it as one among many and design their clinical trials accordingly. Medical services are outsourced just like any other back office function. And given the global nature of such health issues as AIDS or bird flu, the regional issues of geriatric care and obesity in the developed world, or the squabbles over patents and intellectual property, the environment in which the healthcare establishment operates is similarly global.
When I worked at a pharmaceutical company, the technical staff was as interested in The Lancet as The New England Journal of Medicine and we were sending articles out for translation on a fairly frequent basis. The company was in the midst of a fairly long term initiative to move away from a U.S. system of safety reporting and standards to the international standards of the World Health Organization. And for that matter the FDA was doing a lot to harmonize with WHO standards themselves. When the company got bought out by a much larger one, they were considerably ahead of us in this regard. When we convened an expert advisory panel, probably about half of the experts were foreign.
The basis of my freak out is that in this global context I wonder to what extent the existence of a single massive, advanced capitalist market in healthcare has positive effects on the healthcare systems of the entire world. To what extent do the socialized healthcare systems depend on the non-socialist one? What other effects does a single entrepreneurial, highly expensive, out of control healthcare system have on those of the rest of the world? Our system is comparatively awash in money and the existence of one market like this may act as a safety valve for other markets that are not.
Most glaringly, U.S. patients are subsidizing the pharmaceuticals of the rest of the world by paying more for them than anyone else. Right now pharmaceutical companies sell drugs in many markets that are extremely low margin and, in the case of some developing world markets, even at a loss. But then there is one market where the profits are spectacular. What happens to pharmaceutical companies when the one high profit market becomes another low margin one?
And what of the role of the standard setter? How would the healthcare systems of the world fare once robbed of the example of the massively technological, expensive healthcare of the United States? In terms of the aggregate statistics of life expectancy and infant mortality the U.S. is definitely being outperformed by many foreign healthcare systems, but given the unique challenges of the U.S. — epidemics of obesity, poverty, automobile and gun related trauma and the consequences of military adventure — the U.S. has developed a medicine of heroics. It is a wonder that our medical establishment has been able to mitigate the consequences of our culture as much as it has. Without the capitalistic healthcare system of the United States, would the global pace of medical innovation slow?
And it is not just that the United States is a boon to the world, but it is the existence of a system of diverse healthcare regimes, the United States being just one, that produces intellectual and experiential breadth. So the United States healthcare system follows the money, producing a series of lifestyle drugs and quality of life enhancing procedures, e.g. tennis elbow may go on the waitlist in France, but zips right to the head of the line at the local outpatient clinic in the U.S. Meanwhile, socialized healthcare systems focus on nuts-and-bolts medical issues. For example, staff infections which are reaching near epidemic proportions in the U.S. have all but been wiped out in Europe. It is potentially an intellectual example of the comparative advantage of nations. Each nation specializes in an area of healthcare most germane to it, or that it does best, then the literature exports and all the world benefits from the increased breadth of expertise.
But of course I label this though a "freak out" because it is not very carefully considered. I think the point about comparative advantage is interesting, but comparative advantage could perhaps more usefully be derived from the varying medical needs of national populations instead of the vagaries of market structure. The other points fare much worse. Pharmaceutical companies less flush with cash might actually perform better in that they would spend less on lifestyle drugs and advertising and instead focus more on their core mission of medically significant research. Besides, most medical research is already publicly funded in the U.S. as well as in the rest of the world and the savings of a more efficient overall healthcare sector could allow for expanded spending in innovation.
This model of bureaucratic European healthcare versus nimble, entrepreneurial American doctors completely misses the real nature of healthcare in the U.S. At this point in its development healthcare is inescapably, ponderously bureaucratic. Perhaps the best way to describe the U.S. healthcare system would be to call it private socialized medicine. Insurance companies are inherently redistributive; and insofar as they are private that just means they're undemocratic.
The American cowboy capitalist model of innovation radically misconstrues how innovation occurs in the medical industry. Advances in medicine aren't produced by a lone maverick doctor who sets out on his own to pursue, say, a cutting edge heart bypass procedure. An entrepreneur of this sort could never bear the liability, investors would be unqualified to judge the merits of such a venture and it would probably be a gross violation of medical ethics and the scientific method. Healthcare innovation itself is a bureaucratic act because the practice of medicine is a practical science. Acceptance of innovation is left to the judgment of professional communities, not the market. And innovations are rolled out very conservatively owing to the delicacy of the human subjects to which they are applied, and then only under the strict control of and jealous cover of giant institutions. In many fields the bureaucracy impedes, but in medicine the bureaucracy enables. The lone practitioner would be naked and impotent.
I think that the industry of most apt comparison might be the military. As the shakeout in the defense industry at the end of the Cold War demonstrated, a significant sector of the defense industry was wholly, or at least critically dependent upon government buying — that is, upon a single-payer system. Of course there are horrendous problems in military contracting that require constant and careful oversight. In fact there is a whole literature devoted to the subject (perhaps most famously the paper by Fred Hoffman of the RAND Corporation, "The Economic Analysis of Defense: Choice Without Markets," The American Economic Review, vol. 49, no. 2, May, 1959, pp. 368-376). But would anyone say that the U.S. system of single-payer defense has produced the world's worst military? The Department of Defense has managed to produce the most advanced, efficient, capable military in the world, and that with a partial monopsony. Of course quality is relative. Maybe we are missing out on the military that we could have if we switched to a system of privatized national defense but we just have nothing with which to compare. But I suspect that few would make this argument. Privatized defenders are called warlords and they collect their fees usually in a manner similar to the way that the mafia charges for "protection."
One might say that private healthcare does in fact work just like a privatized military, only the insurance companies don't have to send around bands of strongmen because they can rely on people to break their own kneecaps.
And finally, should the citizens of the United States, especially the poor ones, be expected to take one for the team?
September 11, 2001 — Five Years On
Looking north at Midtown Manhattan from the top of One World Trade Center, circa August 1998.
Loving New York
I spent the summer of 1998, the summer right after I graduated from college, subletting the apartment of a friend in New York — the same friend who called me, still in bed at six o'clock in the morning Seattle time, from Times Square on her way to work to tell me to get up immediately and that I had to turn on the television: an airplane had hit the World Trade Center.
Like, I suspect, all people who live in New York for however long, I came to feel like I owned the place, like it was my city, that the embrace of the place was unique to me. And in my feeling for the city, the World Trade Center held a special position of awe and admiration. In those towers I felt as though I could see the world-historical significance of the city and in fact world history itself made very concrete.
I spent that summer reading the first volume of Fernand Braudel's Civilization and Capitalism, a work that has effected me perhaps more deeply than any other. It was out of a love for Fernand Braudel that I went to Italy, and that I chose the cities to visit that I did — Florence, Venice and Genoa — because of the essential role he assigned to them in the early history of capitalism. I was as excited as I was about a swim in the Mediterranean because of the romance with which Mr. Braudel had imbued the sea.
In the first volume of Capitalism and Civilization, The Structure of Everyday Life: The Limits of the Possible (1979), Braudel lays out the scheme that will determine the work. The brilliance of the book is how theoretically thin, but powerful it is. What follows is, with the exception of a few paragraphs intermixed with the narrative, almost the whole of the theoretical discussion of the book:
...there were not one, but several economies. The one most frequently written about is the so-called market economy, in other words the mechanisms of production and exchange linked to rural activities, to small shops and workshops, to banks, exchanges, fairs and (of course) markets. It was on these 'transparent' visible realities, and on the easily observed processes that took place within them that the language of economic science was originally founded. And as a result it was from the start confined within this privileged arena, to the exclusion of any others.
But there is another, shadowy zone, often hard to see for lack of adequate historical documents, lying underneath the market economy: this is that elementary basic activity which went on everywhere and the volume of which is truly fantastic. This rich zone, like a layer covering the earth, I have called for want of a better expression material life or material civilization... the informal other half of economic activity, the world of self-sufficiency and barter of goods and services within a very small radius.
On the other hand, looking up instead of down from the vast plane of the market economy, one finds that active social hierarchy were constructed on top of it: they could manipulate exchange to their advantage and disturb the established order. In their desire to do so — which was not always consciously expressed — they created anomalies, 'zones of turbulence' and conducted their affairs in a very individual way. At this level, a few wealthy merchants in eighteenth-century Amsterdam or sixteenth-century Genoa could throw whole sectors of the European or even the world economy into confusion, from a distance. Certain groups of privileged actors were engaged in circuits and calculations that ordinary people knew nothing of. Foreign exchange for example, which was tied to distant trade movements and to the complicated arrangements for credit, was a sophisticated art, open only to a few initiates at most. To me, this second shadowy zone, hovering above the sunlit world of the market economy and constituting its upper limit so to speak, represents the favored domain of capitalism, as we shall see. Without this zone, capitalism is unthinkable: this is where it takes up and prospers.
...
The market economy still controls the great mass of transactions that show up in the statistics. But free competition, which is the distinctive characteristic of the market, is very far from ruling the present-day economy — as nobody would deny. Today as in the past, there is a world apart where an exceptional kind of capitalism goes on, to my mind the only real capitalism: today as in the past, it is multinational, a close relation to the capitalism operated by the great Indies Companies, and the monopolies of all sizes, official or unofficial, which existed then and which were analogous in principle to the monopolies of today. Would we not call the Fugger or Welser firms transnational today, since they had interests all over Europe and had representatives in both India and Latin America? (23-24)
One day while strolling through the plaza below the Trade Center towers, I came across a little farmers' market in the process of making the day's last transactions and tearing down. A truck was parked nearby with the rolling back door open. Red tomatoes and various greenery was laid out in produce pallets on folding tables and in wooden crates. It was, I believe, right at the corner of Liberty and Church Streets.
It was like someone had built a model of Mr. Braudel's schema. Here were farmers selling produce that they had grown themselves, harvested themselves, loaded onto trucks and driven into the city. Depending who you talked to, you could purchase the produce directly from the man who grew it. It is the market acting in its most basic and direct fashion. And yet scarcely two hundred feet away rose the World Trade Center, its offices filled by equities traders, commodities traders, risk managers, venture capital managers, financiers of all stripe — the commanders and orchestrators of world commerce. The small trader and buyer there on the ground, their wares and money in the open air, the commanding heights rising above, their transactions conducted in utter secrecy.
Again, I saw something previously described to me, passed as information, made real and set before my eyes. I tried to take a collage of photographs, but somehow they were lost amidst my junk, even if found, the film long expired.
Melancholy About New York
I have what I euphemistically call an archive of old magazines and newspapers. In May 2003, as I was preparing to move to Washington, D.C., I was sorting through them, throwing things out, setting aside the articles to keep, organizing what remained. At some point, I had put my stacks of newspapers in rough chronological order so as I dug down into the pile, time advanced. I came to the papers from late August and the first week of September 2001 and was surprised at the emotion that struck me. Each paper had headlines and articles that were commonplace, the politics and goings-on of everyday life. "These people don't know what's coming," I thought. It was like the film The Final Countdown (1980). I was a displaced person from the future, watching, aware of what was hidden from view, but unable to do anything about it. The days ticked by: September 8th, September 9th, September 10th. I don't remember what was on the front page of the New York Times on September 11th — I know the boxes of newspapers are somewhere around my apartment — but I recall it's being something entirely unimportant given the magnitude of what was finally unfolding that day as people were just receiving their papers.
I think that the most beautiful thing that I saw after September 11th was a 1983 documentary made by the New York Port Authority,
Building the World Trade Center. It was dug from the vaults, having been an antiquarian relic for years, and aired on CNN shortly after September 11th. The educational parts of the video are interesting enough, but starting at ten minutes in and continuing to the fifteen minute point, the pit and foundation of the building are done and, set to a waltz by Strauss, the building begins to rise. Somehow some documentary maker for the Port Authority managed to do as well with Strauss as Stanley Kubrick. There is no voiceover, just the dance of men and machines and cranes and steel and concrete. The Hudson river occasionally makes an appearance in the background.
Today we will undoubtedly be barraged with the horrible sights and sounds of the buildings as they were falling down. This lovely little minuet of the buildings rising is a pleasant counterpoint and supplement to today's remembrances.
As the video ended and the credits rolled by — not the credits for the film, but for the design and construction of the World Trade Center buildings themselves — I remembered that I have another tenuous connection to the towers. The electrical engineering firm responsible for all the building systems was Joseph R. Loring and Associates. I spent a year working for Hill International providing construction management services for the remodeling of the Supreme Court building. The electrical engineering firm on that project was also Joseph R. Loring and Associates.
Every week on Tuesday mornings on the sight there was a construction management meeting and I took notes for the minutes. I sat down at the end of the meeting trailer and a few minutes before 9:00 AM Mr. Loring would come hobbling in with his crew. He was a small Jewish man who seemed more round than he was. He was always immaculately dressed in a three piece suite and was cantankerous and a tiger when he disagreed on a technical matter. His team of engineers were solid, old school types: fat men who struggled to dress professionally, who learned engineering on slide rules and logarithm paper.
I'm sure that Mr. Loring wasn't doing any design work himself, but I recall someone on the sight saying that he always signed all the final design documents. It was his legacy. Fifty or a hundred years from now, when next they remodel the Supreme Court, they will break out those blueprints from the archive and his name will be all over them. I never asked — he seemed unapproachable to someone as lowly as myself — but I wonder how Joseph Loring felt about September 11th.
Many an architectural critic or New Yorker thought that they were hideous. I wouldn't say that they were beautiful: their glass-box minimalism, their plain giganticness and their lack of any relation to the rest of the city was off-putting. But watching Building the World Trade Center, especially the scene where the camera pans around a half-completed tower and an aluminum deck, not yet covered in concrete, glistens in the sun (at time 11:16), it was an amazing thing. Or watch all these New York union guys — probably none particularly brilliant individually — they know how to smooth concrete or fit pipes or weld. But taken together they were capable of something almost unimaginable.
Management, or the Human Resources Field Representative
On Tuesday night S. and I went to see Barbara Ehrenreich speak on her new book, Bait and Switch. It is something of a sequel to her left-wing hit, Nickel and Dimed, only now her point is that it isn't just blue-collar workers who are in jeopardy, it is the white-collar workers as well. Apparently the book isn't about the actual job, but the laborious and demoralizing road show that is the job search.
One of the issues that she talked about quite a bit in her presentation is the devaluation of skill and experience. A resume consultant that she went to told her not to list any job experience older than ten years. She was astounded at the invasion of popular psychology into management thinking about personnel. All the interview coaching was about projecting a positive attitude and the interview questions about emotions and personal preferences. Personality tests are now widely used. There was almost never any discussion of proficiency or knowledge. She actually went so far as to suggest that the obsession on the part of management with positive attitude at the expense of proficiency may begin to be a performance problem for the U.S. economy.
All of this reminded me of a conversation that S. and I had a few weeks before. Both of us are proponents of scientific management and chafe at the disarray of office life. S. was on a rant that is all too common for her at this point. Most departments in most companies just barely have control over their procedures and records. People don't have the time or many even the good sense to consider how things are done. The procedures grow and change in an organic way, with employees randomly having ideas about how to improve things and adaptations being made ad hoc when requirements change. One procedure is changed with no consideration given to the network of dependencies around it. When changes are made, not everyone is properly informed of the new procedure. In the haste that is the modern company, documentation languishes with no relevance to the way the job is actually performed. Categories, considerations and paths proliferate. Even a set of procedures that start out well designed — a rarity! — eventually end up a confusing, inconsistent, opaque, idiosyncratic mess.
Then S. launched into her vision of how things should be. Procedure should be heavily systematized and then instantiated in software and intelligent paper flow. The system should be validated and stress tested. Change would have to come about in a patient and rigorous way because procedure would be so heavily systemized. There should be someone in every department charged to manage procedure and change thereto. Workflows, documentation and decision trees would be updated and promulgated to the necessary parties in a deliberate manner.
Then she paused. "Wait a minute. There is someone in every department whose job it is to do all that. They're called managers. They just don't do it." At this point, managers are more like the Human Resources field representative, seeing it as their job to inspire and motivate their employees. Or they are the "people person," that is, the designated interdepartmental squabbler.
I suggested that we start compiling instances of management insufficiency toward the goal of a book, contra the seemingly endless crop of management books, bullish on the practice, brimming with faddish advice and choked with bluster and confidence to a one.
I had made the suggestion as a lark, as an act of iconoclasm. Somehow I didn't put it all together until last nigh what a serious political and economic issue it really is.
Toward the end of the question and answer session, someone asked — with a tone suggesting disbelief that capitalism could be anything other than maximally efficient — how it could be that businesses were thriving if this level of idiocy was so wide-spread. Ms. Ehrenreich expressed genuine bafflement. She couldn't explain it. The next person up started by saying that the previous company that he had worked for was so grossly incompetent that he quit and took six months to recover from his dismay.
Supply Side Reductio ad Absurdum
While scouring the internet for some data on federal revenues, I kept coming across one supply-side diatribe after another. Is there anyone else out there writing about taxes and the federal budget besides those quacks!
After this frustration, it was a well timed post on the part of Matthew Yglesias ("Party of Ideas Watch," 13 September 2005) that he decided to conduct an otherwise long overdue reductio ad absurdum of the supply side position:
Its empirical falsity aside, this strong supply-side thesis doesn't even make sense as ideology. It casts conservative tax cutters as trying to maximize federal revenue (impeded, for mysterious reasons, by blinered high tax liberals) but also as opposed to spending the revenue on useful programs to help people. Supply Side Jesus is going to fill the federal coffers and then the president is supposed to just . . . sit on the cash, like Scrooge McDuck swimming around in a pile of gold coins.
Now of course that's not something anyone actually thinks, but it's the implication of views that are both widely-held and central to the Republican Party's self-presentation to the electorate. An alternative, equally "coherent" view would be that conservatives should favor tax increases which, by reducing revenue (remember your Laffer curve), would starve the beast.
As a bonus, Supply Side Jesus was a heartening and humorous counterstrike in the Kansas wars.
|
|