Friday, February 26, 2010

Stalin

Late last summer I was in a brief Russian phase, and so I picked up Simon Sebag Montefiore’s two-volume biography of Stalin (Young Stalin and Stalin: The Court of the Red Tsar).
This is thick description at its finest; Montefiore doesn’t provide a systematic overview of Bolshevism or Communist Russia, but that’s not what he’s aiming for. Rather, he has produced a fascinating, intimate picture of Stalin and his nearest (in his case, one can only rarely speak of his dearest).
A few things that stick with me a few months later:
- the “wild east” of the Caucasus, which produced the Georgian Joseph Djugashvili, who went by the names Soso, Koba, and eventually Stalin. The Caucasus region was barely under the Tsar’s control, and the lawlessness and violence there (in Stalin’s hometown of Gori, organized brawls between all of the town’s inhabitants was a regular pastime) undoubtedly shaped young Stalin.
- Montefiore provides the most compelling explanation I’ve found for Stalin’s terrible paranoia that culminated in the Great Terror of the late 1930s (indeed, informed his entire life and rule). In addition to Stalin’s personal insecurities and need to dominate, it was the Tsarist regime itself which fostered this paranoia. The regime’s ochrana secret service, established after Tsar Alexander II was assassinated in 1881 by radicals, was everywhere and had penetrated the radical circles in which Stalin grew up – but the ochrana itself had been penetrated by radical agents. Some of these agents for both sides were, in fact, double and even triple agents. No one could ever fully be trusted. Stalin’s paranoia grew out of these real conditions at the end of the Tsarist regime. Of course, the scale of paranoid violence under the two regimes was orders of magnitude different: the ochrana was responsible for four to five thousand deaths, Stalin for something like 20 million.
- the author shows convincingly that Stalin’s power derived not just from the terror he exerted, but also from his charm. He could be an attractive man – witty, exuberant, on occasion showing sincere concern for at least some of his circle. This side of Stalin makes his inhumanity, which hardly gets short shrift here, all the scarier.
- one strand throughout are the parallels between the Bolsheviks and religious movements. Montefiore decribes them as a “military order of knights.”
- since the focus is on Stalin and his “court,” the millions of deaths of ordinary Russians, Ukrainians, and others only appear on the margins. Nonetheless, the focused study of this smaller circle still provides plenty of chilling moments. Though not as dramatic as the period of the show trials in the 1930s, for me perhaps the most vivid, visceral illustration of the terror Stalin inspired occurred in the last years of his life. The dictator had begun to focus his suspicions on an alleged Jewish plot against him. “Shrewd people began to divorce their Jewish spouses,” Montefiore notes laconically(SCRT, 498). This single, short sentence conveys the terror of the dictator’s moods rippling out in expanding circles.
- there’s a terrible, tragic irony in the Bolsheviks’ motivation, given their avowed philosophy. Marxism had preached, of course, that the oppressed would overthrow the elite. The Russian situation ended up being nearly the opposite. Lenin (a nobleman) and many of the other top Bolsheviks were elites who expressed hatred of their own, backward countrymen. In other cases, like Stalin’s, the pattern was at least somewhat closer to what Marx had predicted: they came from minority groups (Caucasians, Jews) who hated the dominant Russians. Once the Bolsheviks came to power, they made war on their own country, and the main victims would end up being Russian and Ukrainian peasants, hardly the elite.
- finally, Montefiore’s prose is enjoyable to read. Frequently, there are real gems, especially when it comes to colorful put-downs. When Stalin’s paladins regularly break into song at their late night banquets, they form a “murderous boy band.” The same group, on an especially inebriated night, resemble a “Neanderthal stag party.” Khrushchev is a “meteoric bumpkin.”

Thursday, February 25, 2010

Health care and two kinds of collective action problem

There appears to be a paradox in the great health care debate. Central arguments of each side, while on the surface quite different and pointing to different solutions, in fact resemble each other at a more abstract level: they both revolve around collective action problems. Both arguments, as far as I can tell, are valid and important. To my knowledge (and I can only claim to know a tiny fraction of the contributions to the debate), no reform proposal addresses both points in the same reform proposal.
The Democrats point to what Paul Krugman recently dubbed the “insurance death spiral” (http://www.nytimes.com/2010/02/19/opinion/19krugman.html). The basic problem revolves around the collective action problem known as adverse selection. If generally healthy people – using their “insider knowledge” of their own conditions, hence the term adverse selection - can opt out of insurance schemes including less healthy people (or out of insurance altogether), this will leave the less healthy to sustain the insurance pool. Because they are less healthy, their healthcare costs will go up compared to earlier, which will, in turn, drive out even more relatively healthy people. And so on. (It’s sort of like a Gresham’s law of insurance: bad risks drive out good.) Conversely (but with a similar outcome), an insurance company may “cherry pick” only the healthy people, leaving the unhealthy to somebody else, either an unfortunate pool of unhealthy people or the government. In both cases, adverse selection leads to overly narrow insurance pools, in which the unhealthy have been segregated, driving their costs through the roof. Thus, Krugman and others point to the need to mandate universal coverage (i.e. every individual must be insured) and to prevent insurance companies from “cherry-picking.” Otherwise, this insurance death spiral will lead to the system of insurance unraveling.
It’s worth considering how the health insurance system – as it’s now practiced (see below) – differs from other kinds of insurance. In the case of auto insurance, coverage is mandated for individuals; companies, however, can deny coverage (I think) and can charge differential rates based on the person’s track record and characteristics (sex, age, etc.). Would there be the potential for more adverse selection in the case of auto insurance than health insurance – i.e. could good drivers know they are more secure relative to bad drivers than generally healthy people can relative to unhealthy people, and thus opt out of insurance? Is remaining safe on the road more in drivers’ own hands than remaining healthy is? Probably not. Hence, even if good drivers could choose to forego insurance, fewer would do so than Krugman and the Democrats rightly fear happens with health insurance. And even so, we still mandate coverage. This suggests that mandating universal coverage in health care makes sense.
Here’s where the other side of the equation comes in. We need to look at what health insurance, as it’s currently set up, actually covers. The comparison with auto insurance is revealing. It shows that our current health insurance system doesn’t really deserve the name insurance. This is where the Republicans’ arguments have traction.
As argued in a brilliant piece by David Goldhill in the September 2009 issue of the Atlantic Monthly (http://www.theatlantic.com/doc/200909/health-care), we’ve gotten used to health insurance covering nearly all our medical costs (perhaps five sixths), not just catastrophic, unforeseeable ones. We go to the doctor for a cold or for a pregnancy – insurance picks up major portions of the expense. This is completely different than the way auto insurance works. It would be as if auto insurance covered not just collisions, but five sixths of our expenses for gas and oil changes as well. Under such circumstances, when we don’t pay for most of our own expenses, the results are all too predictable: people consume far more than they would if they had to pay out of pocket. Feel a small cold coming on, see the doctor and pay the $10 co-pay. If you had to personally fork over $200, how many of you would choose to suffer through it? What we have in the health field is not insurance; it’s a kind of cost-socializing scheme. The collective action term here is moral hazard – people behave differently when they know they won’t have to bear the full costs.
Goldhill and others therefore recommend restoring a true system of health insurance. I.e. insurance should only cover truly catastrophic occurrences. For other illnesses, people should pay out of pocket or rely on subsidized health savings accounts (I refer people to Goldhill’s article for the details of how this would – or might - work).
So the one side points to the collective action problem of adverse selection (insurance death spiral), while the other focuses on the collective action problem of moral hazard (socialized payments).
It’s striking that two such similarly structured arguments just pass each other in the night, seemingly oblivious of the other. How can this be? Surely, Goldhill and the Republicans must be aware of adverse selection? And Krugman and the Democrats must know about moral hazard? If so, I haven’t seen anybody from either side address the other’s valid arguments. Why not?
I suspect rather different explanations in each case. My hunch is that the Republicans would say that if one created a genuine insurance system, adverse selection problems would largely disappear. After all, much of the responsibility would have been placed back on individuals. Where insurance kicks in, in catastrophic cases, they might argue, there’s less danger of adverse selection, since catastrophes occur more randomly than do smaller-scale health problems (this might not in fact be the case) – and so everybody would have an interest in being insured and nobody, or at least fewer people, would seek to segregate themselves in more favorable risk pools. Regardless, Goldhill and the others advocate mandating insurance coverage (i.e. real insurance). Adverse selection problem solved. But questions remain: technical ones about how the health savings accounts and subsidies would work, ethical ones about rationing care (for sub-catastrophic problems) based on wealth, and – perhaps most vexing of all – political ones about how to get there from here. It seems to me that the interests invested in the current cost-socializing system will be mighty hard to dislodge and overcome.
In the case of the Democrats, the blindness vis-à-vis the moral hazard problem seems rooted in an ethical commitment and wishful thinking. The commitment is to universal and equal access to all kinds of medical care (not just catastrophic). The wishful thinking seems to involve (I say seems to because I’ve never seen the Democrats address the moral hazard problem head on) the assumption that by broadening the risk pool and making it healthier on average, costs can be contained. But I see no reason to think that moral hazard will somehow make a detour around a broad risk pool. Healthcare costs will continue to escalate much faster than the economy grows.
So, we seem to be caught between one proposal that is politically unachievable, and perhaps uncharitable, but financially workable, and another that is achievable in the short term, and ethically broad-minded, but unsustainable in the long run.