What I’ve been reading
So much has happened in the world lately that I've neglected to keep you posted on which books have crossed the threshold. Here are a few of the more memorable ones:
1. R.W. Johnson, South Africa's Brave New World. In the U.S. there is only the Kindle edition, but I ordered a British edition through the library. This is a comprehensive political history of the country since the fall of apartheid; I thought I wouldn't finish it but I did.
2. Juan Goytisolo, Juan the Landless. It's odd that such a splendid author is read so little in this country. Beware, though — this one lies in the territory somewhere between Ulysses and Finnegans Wake. It is very powerful for those inclined in this direction and now I can see why his name in mentioned in connection with a Nobel Prize.
3. Steven C.A. Pincus, 1688: The First Modern Revolution. A clearly written, well-argued book, which on top of everything else is better than most books on the Industrial Revolution, hardly its main area of focus. The main point is that the Glorious Revolution was more radical than is commonly portrayed and it represented the culmination of a struggle between two very different kinds of modernizing forces in England. Chapter 12 — "Revolution in Political Economy" — is a gem. This is a very impressive book.
4. Nicholas Carr, The Shallows: What the Internet is Doing to Our Brains.
5. Zachary Mason, The Lost Books of the Odyssey: A Novel. The premise — an alternative literary version of Homer's story — sounds contrived but I was surprised at how good and how moving this was. Here is one good review of the book.
6. Kent Annan, Following Jesus Through the Eye of the Needle: Living Fully, Loving Dangerously. What is it like to be a Christian missionary in Haiti? This is a surprisingly insightful and moving book, one of the best Haiti books but of general interest as well. Most of all, it's about the author's struggle with himself. Chris Blattman likes it too, here is his review.
*On the Brink*
The subtitle is Inside the Race to Stop the Collapse of the Global Financial System and the author is (?) Henry M. Paulson, Jr.
I don't consider myself a member of the anti-Paulson brigade but this book is a boring whitewash. At least up through p.100, everyone is brilliant, charming, etc.
He explains that as a Christian Scientist he is comfortable relying on prayer rather than formal medicine. I guess that doesn't hold for the banking system.
So far the best line is had by Nixon, who on p.29 eviscerates the idea of a VAT. Everyone else sounds like a cliche. There may be revelations in the later chapters, but I probably won't get to them.
Karl Case, poet
It's about the housing bubble and subsequent crash and the poem is here. Excerpt:
So now we come to the end of this ode
Without much to say for certain.
I hate to say, that where we are
Not beginning or final curtain.
The truth of the matter at the end of the day
Is that markets will make you humble.
Just when you think that it's time for a drink
They will turn and fortunes will crumble.
Assorted links
Rebuilding Haiti
Here is a new and very worthwhile short piece from Progressive Fix, authored by Jim Arkedis and Mike Derham. I am more skeptical of the UN than are the authors, but I agree with many of the recommendations and perhaps the UN is the only option anyway. Here is one excerpt:
Once order is established, the UN mission will essentially become a national police force in the absence of a Haitian alternative. To transfer power back to the local government, the UN mission should be tasked with building an effective security force and justice system. That means in addition to cops, the UN may solicit prosecutors and judges in a proxy judiciary. It’s a tall order, but it may be the only way that allows the remaining Haitian government to fully concentrate on reconstruction.
Here is a truly excellent article from the NYT, on the previous lack of Haitian openness and the need to mobilize Haitian expat expertise. Excerpt:
On an economic and political level, the Haitian diaspora could be threatening, said Harry Casimir, 30, a Haitian-born businessman who opened an information technology business there just before the earthquake. “Once the elites have money and power,” Mr. Casimir said, “they’re scared of people like me, the younger generation and so on. Because we travel around the world and see how other governments function, and obviously most countries are not corrupt like Haiti.”
Bob Hahn and Peter Passell are blogging
The focus will be on the economics of regulation. There is further explanation here.
Medicare vouchers
Ross Douthat surveys and evaluates the debate over Paul Ryan's "Medicare vouchers" plan. Here Ezra interviews Ryan.
I am very interested in voucher plans but here is one source of my unease. Let's say you are given a voucher for a health insurance plan and there is no legal requirement that the plan cover Parkinson's. Many people buy plans which do not cover Parkinson's. Some of those people get Parkinson's. Are we pre-committing to ignore the woes of those people? If so, how exactly do we do this?
I'm not ruling this alternative out (there are plenty of cases where we let people die), I just want to know what are the surrounding institutional structures, what happens if these people show up at emergency rooms, and also whether this wouldn't, eventually, give rise to a new "second tier" of lower-quality public sector institutions to handle cases not covered by insurance.
That is indeed one possible reform: a UK-like system for those who gamble and lose, with higher quality care for those who buy the more comprehensive or the more balanced policies. (Maybe lots of people will buy gold-plated care for heart disease and nursing homes but go uncovered for neurological disorders, just to state one possibility.) You'll notice, however, a tension. The better the second-tier public-owned institutions, the more people will gamble with low or unbalanced levels of coverage. The UK-like system might take over large parts of health care, with a private insurance-based system for some subset of maladies only.
That's not the end of the world but perhaps it should be evaluated as such. You might already be thinking that parts of the nursing home and mental health sectors operate this way under the status quo.
There's also a longer-run question, namely whether the seniors would prefer to capture those resources in the form of social security benefits — cash — and take their chances with the publicly owned institutions to a greater degree. Maybe yes, maybe no, but those are the issues I think about when it comes to this kind of voucher plan.
At the other end of the spectrum, the law can mandate that the voucher-funded insurance plans cover lots and lots of conditions. Mandates don't stay modest, etc. In that case, is there really competition between the private insurance plans? What's the advantage of having private participation here if the insurance companies are regulated like public utilities and forced into a common price/quality mode?
It seems to me that the first set of alternatives are the relevant comparison.
One proposal for health care reform is to stipulate a total (fixed) budget for social security and Medicare together and then create a commission — controlled by Congressmen from Florida — to allocate the funds as is seen fit. I wonder what the resulting equilibrium would look like. Is that a politically acceptable way to institute a de facto voucher program?
Markets in everything
Anti-theft lunch bags. Here is the description:
…a few spots of mold may work wonders to protect your precious sandwich when your custom labels, pleading requests and desperate detective work fail to find your regular at-work lunch thief. Reusable, resealable, one-size-fits-all and ready to go right out of the box (or brown paper bag), these clever little containers from Think of The might seem more like a prank object or gag toy than a functional product but it will almost certainly deter even the hungriest of would-be food hackers.
For the pointer I thank Lawrence Rothfield, author of this excellent book.
Henry Aaron writes to me
James Kwak's calculation of the value of tax exclusion is incomplete. He leaves out the exclusion from the payroll tax, worth 15.3 percent to the person in his example and to most people, and 2.9 percent (at the margin) for the rest who earn more than the OASDI taxable maximum. The correct math is that the gross wage is 1 + .0765 = 1.0765 to allow for the employer's payroll tax cost. The take home pay that could be used, after both payroll and income tax for someone in the 15 percent bracket is 1 – 0.0765 – 0.15 = 0.7735. That means that the tax wedge is equivalent to a subsidy of 1- [.7735/1.0765] =.7185. That is a 28.15 percent subsidy.
For filers in the 28 percent bracket, which is easy to reach for a couple each of whom earns, say, $75,000, the subsidy is a bit over 40 percent.
Profile of Sam Bowles
Words of wisdom
…if you decided to short only countries whose foreign exchange reserves reached some large proportion of gross world product, you’d be batting 2 for 2 right now as you started shorting China. First you would have shorted the USA in the 1920s, and then you would have shorted Japan in the 1980s.
You can make a lot of mistakes by analogizing governments to countries, but every now and then it is worth doing. If I were a major investor, I would get nervous each time I saw a company with massive cash reserves on its balance sheet. That's often a sign that discipline is headed out the window.
To be sure, it is possible for a government (or company) to make mistakes in the other direction as well.
How much does tax-subsidized health insurance matter for health care costs?
James Kwak gives us his back-of-the-envelope estimate:
The median family household had income of $62,621 in 2008, which means it has a marginal tax rate of 15%. (We’re pretty close to the 25% threshold, so I’ll use 20% in what follows.) So without the exclusion, the typical family plan would cost about $16,000 in pretax dollars, not $13,000; the exclusion gives the median family a discount of 20%. Only about 60% of people get health insurance through an employer plan, so the average discount across the population is only 12%. Given that the price elasticity of health care is almost certainly a lot less than one (if you double the price, demand won’t fall in half), the overconsumption due to the tax exclusion must be less than 12%. Yet our per-capital health care expenditures are more than 60% above those of any other advanced country.
In other words it matters, but not as much as many people claim.
Addendum: Here is Henry Aaron's correction.
Assorted links
The fact I would like to know about the stimulus
I break the stimulus into three parts: the tax cuts and transfer increases, the aid to state and local governments, and the traditional spending programs. Here I'm talking about only the third part. (If you are wondering, I regard the first part as mostly ineffective and the second part as mostly effective.)
Of the workers employed by this third part of the Obama stimulus, what percentage of them already had jobs? What percentage moved from unemployed to employed? More hypothetically, what percentage had jobs but would have lost them, thus effectively counting as a move from "unemployed" to "employed" status?
I'm not talking about the maybe-hard-to-estimate effects from boosting aggregate demand, I'm talking about the "mere counting" aspect of the problem. "We hired him, he didn't have a job before. Now he has a job." What percentage of the hired people fall into that category?
I've read plenty on these studies, but they don't seem "net" to me.
Does anyone know where this information is available?
What is interdisciplinarity?
Maybe not what you think. Louis Menand writes:
Interdisciplinarity is not something different from disciplinarity. It is the ratification of the logic of disciplinarity. In practice, it actually tends to rigidity disciplinary paradigms. A typical interdisciplinary situation might bring together, in a classroom, a literature professor and an anthropologist. The role of the literature professor is to perform qua literature professor, bringing to bear the specialized methods and knowledge of literary study to the subject at hand; the role of the anthropologist is to do the same with the methods of anthropological inquiry. This methodological constrast is regarded as, in fact, the intellectual and pedagogical takeaway of the collaboration. What happens is the phenomenon of borrowed authority: the literature professor can incorporate into his work the insights of the anthropologist, in the form of "As anthropology has shown us," ignoring the probability that the particular insight being recognized is highly contested within the anthropologist's own discipline.
Because professors are trained to respect the autonomy and expertise of other disciplines, they are rarely in a position to evaluate one another's claims. So there is nothing transgressive about interdisciplinarity on this description. There is nothing even new about it. Disciplinarity has not only been ratified; it has been fetishized. The disciplines are treated as the sum of all possible perspectives.
Here is my previous post on Menand's new book.