Steve Reads

Shorter Murakami protagonist from each of these stories:

I was living a rather dull, barren life. Buried deeply within my past was a hatred for someone — my parents, myself, my ex-husband. I was going about my day, minding my bidness, when I heard that the Kobe earthquake had killed thousands of people. Deep in my heart, I wished that the person I despised was dead. But it was something inside of me that was dying. And I knew that the blackness that lay within me was somehow — mysteriously, metaphysically — tied to the destruction of the homeland. Had I been a better person, those thousands would still be alive. I still wish, despite all that, that my ex-husband/parents/etc. were dead.

Shorter Murakami:

I don’t actually know what the blackness within them is. In most cases I don’t know what happened in their past that has made them such shells of humans. I figured I’ll just throw it out there, leave it as a McGuffin, and go have a sandwich. Easier to leave things unspoken. I can smoke a cigarette and gaze, squint-eyed and silent, into the distance; people will think me profound and I will get laid.

People already know that I am, in some sense, postmodern, but I figure I’ll just smack you across the face with it: I’ll end After the Quake with a short story about a short-story writer (do you get it? The short-story writer is me!) who writes morose stories. The writer in that story then decides that he will a) overcome the timidity in his heart and b) start writing more joyous stories — just like me, the short-story writer! Coming at the end of a book of morose stories, you have to admit that I was pretty clever to have thought of this.

Shorter potential reader of After the Quake:

Skip it.

(With slight apologies to Guardian Digested Reads.)

John Sutton tells us that there’s a tension in the study of why industries are structured the way they are. If you want to study, say, why the microprocessor industry is concentrated (closer to monopoly) whereas the cement industry is not, you can come up with models that contain lots of detail about individual industries and are therefore not of much general use; or you can put forth very vague assumptions that apply across the general run of companies. Sunk Costs and Market Structure is an attempt to strike a good compromise between these two extremes.

Sutton’s guiding observation is that if an industry is monopolistic in one country, it tends to be monopolistic in another. This is not obviously the way things had to turn out. It holds across a broad swath of industries, as well, which means it’s an empirical regularity that any interesting industrial-structure model has to explain.

Sutton goes about explaining it by dividing industries into two categories and deriving substantially different conclusions about each:

• Industries in which advertising is not important. These industries behave as you’d expect: as market size increases, concentration decreases, regardless of the size of fixed costs. Take microprocessors, for instance. It costs billions of dollars to establish a new fabrication facility to compete on the proper scale with Intel. This is an imposing fixed cost, and will keep out many potential entrants. But imagine now that the market size grows without bound — that the microprocessor market reaches trillions of dollars. Then that fixed cost comes to seem less and less significant, and turns into a smaller and smaller barrier to entry. As market size grows, then, we’d expect more entrants. More specifically, Sutton shows that as market size increases, the fraction of market share held by the largest company in that industry tends to zero.

  There’s a bit of detail that I need to explain here. (Indeed, there are many bits of detail in Sunk Costs and Market Structure; I can only explain a small fraction of them here. You should really read the book.) We need to explain what we mean by “compete on the proper scale with Intel.” If you start a small factory to produce a few thousand microprocessors, you’ll need to recoup your fixed investment in that factory, so the average cost per microprocessor will equal something like the total cost of the factory divided by the number of microprocessors you can crank out over the factory’s lifetime. Intel, being much larger than you, builds much larger factories. In particular, they may build a factory several thousand times as large, whose per-processor costs are much lower than yours; we say that Intel exploits “increasing returns to scale” (i.e., “there are advantages to being big”). Their processors will therefore sell for far less than yours, and you will be driven out of the market.

  There is, then, a “minimum efficient scale” (m.e.s.) in a given industry — a factory size below which you can’t produce products at a price that anyone would buy. There are various ways to define minimum efficient scale, all of which Sutton discusses fairly. We can ignore here the specific measures of m.e.s. that he settles on, but suffice it to say that for industries in which advertising is not important, the fixed cost of building a m.e.s. factory is what concerns him.

• Advertising-intensive industries. Sutton describes advertising as a cost that increases the perceived quality of the product, and therefore increases the amount which customers are willing to pay for it. Under this description of advertising, Sutton shows that advertising-intensive industries must always be concentrated above a fixed threshold. That threshold is universal in the sense that, knowing nothing else about a given industry other than that industry’s responsiveness to increased advertising, you can assert that its concentration level will never fall below a fixed level.

  What’s most remarkable about this result is that it holds across a wide variety of models. Sutton explores a large set of such models from the industrial-concentration literature; the man clearly knows the field inside and out. He abstracts away from these models with two simple axioms that describe customer response to advertising.

Sutton spends the rest of the book very carefully analyzing a wide range of industries for conformance with his theory. The industries studied range from ready-to-eat cereals to canned goods to sugar to salt to beer. Each has varying responses to advertising and varying fixed costs (for instance, higher or lower levels of R&D). Within specific industries, even, these quantities often vary: sales of frozen foods sold directly to consumers respond to advertising, whereas those sold to restaurants and caterers, for instance, behave more like commodity goods sold on price. The industry profiles forming the latter 2/3 of the book, based on interviews with executives at many companies and on widely available industry statistics, are a fascinating read on their own, and can be read apart from the heavily mathematical first third of the book.

The theory stands up reasonably well to the evidence, particularly given the paucity of data on many industries. The data are cleanest for the frozen-foods industry, whose evolution — overtaking the canned-goods industry half a century ago — is well-documented. Maybe more the point, Sutton observes that no more-detailed theory could apply to such a wide run of industries.

This book should be understood in the context of Sutton’s broader project, as laid out for a broader audience in Marshall's Tendencies. Economics has tried for at least a few decades to model The One True Equilibrium for any number of processes: how bargaining works, how industries are structured, and how cities are formed, among many others. Indeed, Fujita, Krugman, and Venables repeatedly assert in The Spatial Economy that their idealizations are meant to make their models tractable — which is to say, meant to produce a model which will lead to a few concrete equilibria. Sutton points the obvious: too many assumptions are necessary to make this exercise work out. The consequence of assuming so much is that the models fall over when touched with a feather. Instead of trying to nail down equilibria, set up deliberately broad, but highly believable axioms, and see where that takes you. Good, broad axioms won’t take you all the way to specific equilibria, but they’ll lead to a class of models that’s still useful and narrowly circumscribed — and, more to the point, is likely to hold up under scrutiny in a way that more-precise models do not.

Seen as a demonstration of method rather than as a cookbook, Sunk Costs and Market Structure really ought to be viewed as a revolution in economic practice. Combine this with its scrupulous fairness toward competing models, its analytical rigour, and its abundance of data, and you end up with an economic must-read.

The Logic of Health Care Reform is like countless other books, which is what makes it so depressing to read. Its subtitle — Why and How the President's Plan Will Work — refers not to the current president, but to Bill Clinton. It came out in 1992, came out with revisions in 1994, is available for a penny used on Amazon, and stands as a very sad reminder of the hopes with which people greeted Clinton’s plan.

What is hopeful about The Logic of Health Care Reform is that Paul Starr laid the groundwork for a new progressive media. He cofounded The American Prospect in 1990; it’s a breeding ground for some of the brightest lights in progressive media, among them Ezra Klein, Jon Cohn, and Josh Marshall. The hope, looking backwards with some trepidation, is that Clinton’s failure arms us for success now. Of course we can’t know. If health reform succeeds under Obama, a long cast of protagonists will be adorned with floral wreaths and paraded before the townspeople; if it fails, it will be painted as inevitable, and those same protagonists will be painted as pusillanimous and ultimately valueless. Where I stand right now, it could go either way.

In any case, Starr’s book came out in the thick of the debate over the Clinton plan, and the blurb describes him as “one of the plan’s architects.” It contains the same litany that we’ve read countless times before: the insured population shrinking precipitously; small businesses as victims because of their limited bargaining power; health care costs growing much faster than the overall rate of inflation; health-insurance costs rising while wages remain stagnant, and indeed rising health insurance probably accounting for immobile wages. Firms have a finite bucket of money, after all.

I’ve come to realize that The American Prospect and its derivatives tend to be wonkish. They focus on the economics of health reform, instead of the moral urgency that impels us, as a just society, to help out those who are less fortunate than we are. A glorious exception here is Jon Cohn’s book Sick. You should probably read Starr’s book and Cohn’s back to back; that would give you a picture of why health reform is not only the morally right thing to do, but makes economic sense.

The centerpiece of the Clinton plan was “managed competition.” First, there’s competition: some organization, called the “sponsor” — typically an employer — offers a menu of competing insurers to its members. Members choose their insurer once per year, when they’re not expected to be sick and can choose with a sound mind.

The second piece corresponds to the word “managed”. Unmanaged insurers could undercut their competitors by offering plans that cover less, or by only insuring healthy people. Regulation, then, would require that insurers compete on a standard plan, and must offer it to everyone regardless of health. The plans would be required to be “community-rated,” which is to say that they’d offer the same rates to all their subscribers. This would mean that plans which ensure an older or sicker customer base would tend to have higher premiums. Hence the sponsor would reimburse plans more if they have a sicker customer base, less if they have a healthier base.

Starr does a good job laying out the various moving parts in health-insurance reform. One of these days I’ll sit down and map out exactly how those moving parts interact. If we want universality, for instance, insurance must be required; otherwise adverse selection kicks in, and the healthiest patients drop out of insurance, leading to a downward spiral where only the sickest are insured. Then it becomes a question of who should be required to pay (e.g., employers, employees, the government, …). Some people will not be able to afford coverage at any price, though; these people will need financial help, which then forces us to ask how to help those people. Then there’s the question of how to separate health coverage from employment status: whether you find and treat your heart disease shouldn’t depend upon who your employer is. Tweaking any one of these moving parts causes adjustments in the others, but the total number of moving parts does seem rather small.

Starr’s book is another tool in the armamentarium. At this point in my education, it seems deeply foolish, when it’s not actively harmful, to reject a government role in regulating the health-insurance market. Doing so would almost certainly make the market function better for consumers. People have been talking a lot lately about having a health-care “conversation.” By all means, let’s have that conversation. The first question is: do you believe that it is even a problem that 1/6 of your fellow-Americans are uninsured? If not, there’s not much to talk about. If you do think it’s a problem, the onus is on you to explain why the government shouldn’t require insurance of all Americans. Let’s start that discussion, and let’s use The Logic of Health Care Reform as a starting point.

Jonathan Oberlander’s book is a great introduction to the practical politics of Medicare, and to the basic functioning of the program. I knew very little going in about Medicare, and felt obliged to learn: Medicare-for-all is held up as the goal toward which all health-insurance plans should converge, so it seems that I should understand what Medicare-for-just-the-elderly entails.

Medicare part A — which reimburses hospitals — is funded out of a dedicated tax amounting to 1.45% from employers and the same fraction from employees, whereas part B — which reimburses doctors — comes out of general revenues. Part A, therefore, can go bankrupt, whereas part B cannot. Part B is like the Department of Defense; no one ever talks about the DoD running out of money. In a sense, then, Medicare and Social Security are victims of their own fiscal responsibility. They cannot exceed their budgets.

The politics of Medicare are intimately tied up with this method of funding. Medicare has moved from crisis to crisis over the 40+ years of its existence, each crisis being precipitated by fiscal or demographic changes. People age, the young have fewer kids, recessions cut into tax revenues, etc. The debate over Medicare has always been crisis-driven, and always will be so long as it’s funded out of a fixed fraction of payrolls.

This method of funding, and this series of crises, have also influenced the set of procedures that Medicare covers. There’s always a tradeoff between expanding coverage and keeping the public fisc in check; that tradeoff is the fundamental tension at the heart of Medicare. Congress has consistently chosen to limit benefits rather than to expand Medicare’s budget (and therefore increase the payroll tax).

Consequently, private supplemental insurance — “Medigap” — has moved in to cover what Medicare does not. “As Medicare benefits failed to expand,” reports Jonathan Oberlander, “the proportion of the aged carrying supplemental insurance increased. In 1967, 46% of elderly Medicare beneficiaries had private supplemental insurance; by 1984 that figure had risen to 72%.”

Yet as I’ve mentioned on here before, Medigap is parasitic on Medicare. As Oberlander notes, “there was significantly less private insurance available for services not covered by Medicare. Over 25 years after Medicare’s enactment, fewer than one-half of such policies covered prescription drugs or any physician bills in excess of what Medicare paid as ‘reasonable charges.’” Medigap typically covers expenses up to the Medicare deductible, but it will not go beyond Medicare.

All of this, of course, illuminates sizable chunks of the present “debate” over universal health care. Medicare is not the ne plus ultra of universal health care. It’s certainly a good start in many ways. But coverage for the elderly needs to expand, just as Medicare needs to expand to cover the non-elderly.

Actually, slight correction: Medicare already does cover two groups of people apart from the elderly. I have always seen a little phrase tucked into discussions of Medicare after “the elderly,” namely “…and those with end-stage renal disease [ESRD].” This has always seemed a strange bit of coverage to add. It was added in 1972, along with some amendments that provided Medicare coverage for the disabled. “By 1987,” Oberlander informs us, “there were three million nonelderly disabled Americans under Medicare (including over one hundred thousand dialysis patients), constituting 10% of all program enrollees.”

At least until the ’70s, it seems, many Congressmen hoped that Medicare would be a Trojan horse for universal health care. As one Congressional staffperson quoted in Oberlander puts it, “Rather than serving as a demonstration or pilot, the ESRD legislation proved to be the last train out of the station for national health insurance.” The disabled became eligible for Medicare in the early ’70s; no one else has done so since.

Oberlander insists throughout The Political Life of Medicare that the public supports expansion of Medicare more than does Congress; fiscal prudence, then, is an elite posture at odds with the people the elites supposedly serve. Oberlander has limited evidence for this contention. That evidence is almost entirely from polls: as of 1992, for instance, 67.6% of Americans supported increasing the budget for Medicare, whereas only 32.4% of Congressfolks did. One can think of lots of good reasons why this would be so, apart from Congress misrepresenting its constituents. For instance, Congress has to think of a global budget, whereas the public does not; Congress is more aware of the growth of health-care costs than the public is; the public misunderstands how much money government spends on its various programs (including the famous misunderstanding of how much we spend on foreign aid); etc. More to the point here: “Would you be willing to increase funding for Medicare?” is an entirely different question from “would you be willing to pay x% more of your income annually?” which is likely to elicit even a different response than “Would you be willing to pay $30 more with every paycheck to ensure that the elderly get the coverage they need?” which is, finally, different from how the public would respond to actually losing $30 from each paycheck.

I’m not asserting that each additional step toward realism necessarily reduces a Congressman’s vote tally. Helping out the aged might actually help Congressmen. I’m merely noting my increasing skepticism over time toward the value of polls. We’ve seen this recently: polls show that Americans support health-insurance reform in the abstract, generally like the actual health insurance that they carry, and come to oppose reform the closer it gets to their actual wallets. To the extent that his evidence is based on polls, Oberlander hasn’t convinced me that the public really supports Medicare expansion. I would be more convinced if he could show, via something like an event study, that Congressmen won elections more when they expanded Medicare than when they tightened its belt.

Public perceptions toward Medicare shifted in the ’80s; it became a victim of its own success. The picture of a typical elderly person was now less often one’s own helpless grandmother, and more often a wealthy person on a golf course. Of course, this change happened in no small part because Medicare itself had made the elderly less helpless.

The Republicans took over Congress in 1994, not least because President Clinton’s health-reform bill had died an agonizing death. By 1995, Republicans had begun questioning Medicare’s very right to exist. Three decades of consensus on Medicare died. Rather than merely arguing over rates of growth and means of administration, as they had since LBJ signed the Medicare bill in 1965, Medicare was now in a fight for its life.

14 years later, the politics of Medicare are still uneasy. President Bush failed to privatize Social Security during his second term; Republicans may have put down their weapons for the moment. They continue to insist on their love for Medicare, even as they inveigh against “socialized medicine.” Medicare Part D, providing a prescription drug benefit, passed in 2003, is funded out of general revenues, so it’s not subject to the same cycle of crises that hospitalization insurance is.

Oberlander’s book is immensely valuable, if only because it explains this history in a copiously footnoted, highly readable account. It’s one of the few books that I’ve bothered to buy this year; I know that I’m going to chase down references from the bibliography. (William Glaser’s Health Insurance in Practice, cited glowingly either in Oberlander or in Competing Solutions, is somewhere near the top of the queue.) I find it less convincing, as I’ve mentioned, on the evidence for public support of Medicare. A section toward the end, claiming to refute various political-science hypotheses, is weak, and I prefer to pass over it in silence.

If you’re interested in the health-care debate, you owe it to yourself to learn about Medicare. The more I read, the more I find that the current debate is tackling questions that we’ve long since answered. Jonathan Oberlander’s book is an excellent place to start.

Harold Pollack, frequent contributor to The Treatment, calls our attention to a really remarkable encounter between Senator Tom Coburn (R-OK) and one of his constituents. He’s right: you really need to watch the video in there. Kudos to the CNN anchor for tacking some absolutely on-point observations onto the end.

I want to make just one more observation about Coburn’s remarks there: like a lot of Republican critique during this health-care discussion, Coburn’s remarks actually argue against insurance of any kind. “We should help out each other” is not a substitute for real insurance, whether provided by the government or by the private sector.

From the clip, I don’t know whether the speaker had explained her background, and why insurance wasn’t covering her husband. Had he lost his job? Are they eligible for Medicare? What exactly is their situation? In any case, “rely on your neighbors’ help” is a weirdly pre-capitalist, pre-industrial answer. The way modern societies deal with these sorts of problems is through insurance: large, anonymous risk pools. We can argue over whether a government-regulated or government-run plan is the best way to pool these risks, but the charity solution disappeared when the factories arrived.

The adjective inevitably attached to Haruki Murakami is “metaphysical.” There certainly is some Hegel in Kafka on the Shore, delivered in the form of a lecture by a prostitute after a “totally artistic act of fellatio,” and immediately after a quote from Henri Bergson. I’m told enrollment in philosophy Ph.D. programs shot through the roof, so to speak, after Kafka came out.

It could be that I’m just not bright enough, but I didn’t really grasp the metaphysics in Kafka on the Shore. I’m similarly mystified by the supposed depth of Paul Auster’s writings; I love The New York Trilogy and Oracle Night but the philosophy in each seemed to me an excuse for laziness. We’re moving along in three meta-mystery novels, when it turns out that the lens turns in on the detective. Or we’re hiding in a dark basement, when the lens turns in on the protagonist. It’s an excuse not to end a story while pretending that you have.

Fortunately, I’m pretty sure that Murakami’s supposed metaphysical genius says more about the laziness of book reviewers than it does about Murakami. Most of what makes Kafka on the Shore, and After Dark, and The Wind-Up Bird Chronicle enjoyable, is Murakami’s facility as a storyteller. Wind-Up Bird is a constant tease, and so is Kafka on the Shore. We start Kafka with two my God, what the hell is happening stories which will play out, in parallel and intersecting ways, throughout the rest of the book. On the one side, we have a classroom full of Japanese children hiking off into the hills in 1944, as the country is being bombed to within an inch of its life. They reach a clearing and stop to take a break, and every one of them falls unconscious. Their teacher stands there, stunned, before racing back to her village to get help. All but one of those students regains consciousness within a couple hours. One of them falls into a coma and wakes up with an empty brain and with the ability to talk to cats. So … that happened.

In the present-day part of Kafka we meet the novel’s namesake. He’s running away from home for reasons unknown. We know it has something to do with his cruel, distant father, but that’s about it. Kafka may be crazy; he certainly carries a disembodied voice, whom he calls “the boy named Crow,” that talks to him sometimes. “Kafka,” by the way, isn’t his real name. He’s chosen it as part of the new identity with which he sets out on the road.

(Soon enough Kafka receives a handjob that seemingly comes from nowhere, thus furthering my hypothesis that Philip Roth made unexplained sexual favors, unaccompanied by reciprocation, respectable within “literary” novels. As the novel progresses, the handjob makes a bit more sense, but I can’t escape the suspicion that a lot of highbrow male authors think, “Unwarranted orgasm? Don’t mind if I do!”)

On one path, then, we have the brainless cat-talker (who, by the way, refers to himself exclusively in the third person: “Nakata needs to take a dump” and so forth). On the other we have a really interesting little kid, setting out into the world without much of a plan. He ends up in one of those ornate libraries specializing in obscure forms of literature; it’s the only place where he can expect to be left alone as he formulates a plan for his next steps. He meets its librarian, Oshima, and its head, Miss Saeki. Everyone’s got some terrible secret. Sometimes the secrets are actually nauseating. The story is always gripping.

We flip back and forth between the two threads. They come closer together, and eventually the flipping happens every few pages. Murakami knows how to nail his dramatic pacing. You won’t put this book down once you pick it up.

By the end, a lot remains unanswered. I think that’s almost a definition of a “Murakami novel”, but somehow it’s less frustrating here than in Wind-Up Bird Chronicle. The storytelling more than makes up for any leftover plot holes. I’m unwilling to call Kafka “metaphysical,” though. That word shouldn’t just be a synonym for “vague.”

At the start of his book Oranges — which contains everything you could want to know about oranges and, more importantly, nothing that you don’t want to know — John McPhee explains how legendary New Yorker editor William Shawn (known universally as “Mr. Shawn” and father of Wallace “Inconceivable!” Shawn) meted out article topics to his flock:

While mentioning a number of story possibilities to Mr. Shawn, I uttered the single word “oranges?”

He answered right back. He always answered quickly. It seemed impossible to propose any subject to him that he had not thought about before you had. He kept his writers at the far ends of something like bicycle spokes — all separate, all somehow spinning together and apart, with him at the center — and when he turned down an idea he was usually protecting the interests of some writer whose name would never be mentioned. ‘No. I’m very sorry. No,’ he would say typically, his voice so light it fell like mist. ‘That subject is reserved in a general way for another writer.’ To my question about oranges, though, he said, ‘Yes. Oh, my, yes.’

I like to imagine that’s how McPhee comes up with book ideas generally, and I like to picture Mr. Shawn responding to the winners with the same Episcopalian giddiness. Here, in Uncommon Carriers, the Quirky Idea That Few Would Think Of is: let’s interview those people who carry freight across the United States. It’s brilliant, but it wouldn’t be brilliant in just anyone’s hands. It is brilliant because John McPhee is fascinated by his fellow-humans. He must be one of the greatest interviewers of all time.

I can say this, at the very least, because he sits in trucks and on trains and ships for days at a time; if it weren’t an absolute joy to travel with the man, he would have long since been shot and dumped overboard into the Illinois River.

Yes, there is an Illinois river. There are four of them, in fact. Who knows why McPhee chose to ride a towboat on the Illinois River instead of on, say, the Mississippi. Each river has ships sized appropriately to it; maybe the Illinois is interesting because it carries interestingly large ships, while still being small enough that they periodically run aground. The Illinois is also a “tight-assed river” (the title of the essay in Uncommon Carriers): ships need to make complicated turns all along it. McPhee’s interest is as much in the shipmen doing challenging work as it is in the ships, so he must love watching the pilots handle the turns.

In another essay, “Five Days on the Concord and Merrimack Rivers,” McPhee and a friend follow the path that Henry David Thoreau and his brother explored in the late 1800s. Thoreau, of course, was one of the great back-to-nature men, railing against the coming industrial revolution. That revolution filled the banks of the Merrimack with countless textile factories, which have since been shuttered and have left those towns — like Lowell and Haverhill — desolate and hollow. It’s clever, then, and more than a little sad, to follow the path of that revolution’s enemy a few decades after the mills stopped spinning.

There’s so much else in Uncommon Carriers; I’ve never been happier to have been stuck on a bus for four hours with nothing to do but read. There’s “Out In The Sort,” where McPhee arrives at the main UPS hub in Louisville along with thousands of frozen lobsters on their way to the ends of the earth. Here we learn that “Lobsters are to Christmas dinners in France what turkeys are in America.” We learn that most of the million packages sorted here every day are sorted “between 11 P.M. and 4 A.M.” (McPhee doesn’t say so — he leaves a lot of these questions unanswered if he has the slightest hope that his readers can figure them out on their own — but one presumes that the timing is chosen so as not to conflict with Louisville’s passenger air traffic.) We learn that when you mail a Toshiba laptop off for repairs, it arrives in the hands of a technician “who is a full-time UPS employee,” because the shipping company realized “a few years ago … that it had ‘maxed out in the package-delivery trade and now needed to expand.’”

Or we hop, in “Coal Train,” onto a mile-long train poetically labeled “CTSBT”: “C” because it carries coal, “TS” because it’s destined for the Tennessee Valley, “BT” because it originates at the Black Thunder mine. A mile-long train heading straight from a mine to a turbine, each car filled as fully as operations research allows, fuels one Atlanta power plant for about eight hours. “The heat [from the coal], of course, boils water — eighty-one million gallons of Ocmulgee River water a day — in boilers twenty-five stories tall.” CTSBT is thus not only an amusing way to pass the time with train men; it is a snapshot of American capitalism at its most primal. In this way, “Coal Train” bears a strong resemblance to McPhee’s haunting “Search for Marvin Gardens,” in which he wanders through bombed-out Atlantic City, New Jersey hunting for all the properties on the Monopoly board.

McPhee bookends the whole collection on the road with Don Ainsworth. Ainsworth owns and operates a gleaming, almost vainly clean chemical tanker truck. Tankers, we learn, either carry chemicals or they carry food; “your brother better be F. Lee Bailey” if you’re going to carry both.

Please go read Uncommon Carriers. I literally can’t imagine a better way to spend four hours while wearing clothes.

Quick linguistic nit: people have been talking about the “Obama health-care plan,” but there is no such beast. Unless I’ve missed something, there are bills from the House tri-committee that culminated in HR3200; there’s a bill from the Senate Health, Education, Labor, and Pensions (HELP) Committee; and there’s a bill taking its languorous time getting out of the Senate Finance Committee. The White House did not construct its own bill, deliberately avoiding one of the widely reputed (but possibly mythological) pitfalls of the Clinton plan. President Obama has a set of principles — universal coverage, budget neutrality, and whatever else — but no specific plan.

I can understand why one would call it the Obama plan: the man has been pressing forward on health reform since before he took office. He may well be guiding the whole process from behind the scenes. Still, I think it’s a bit of harmful linguistic sloppiness: the House bill is very different from what’s shaping up in the Senate, reflecting the conservatism of the latter body. Which plan are we talking about when we talk about the “Obama plan”? It’s important to get clear on this; much rests on the details. The only virtue I can see of calling this “the Obama plan” is that it might light a fire under the president to get this done and get it done well.

For a handy comparison of the various plans, let the Kaiser Family Foundation be your guide.

Nothing in that news story says anything that Jane Mayer didn’t lay out years ago in The New Yorker or in The Dark Side. The national shame is not only that we torture, but that major media organizations fell down on the job of reporting it.

This was John McPhee’s first book, so it obviously holds a lot of interest as a glimpse at the man’s later style. I’m happy to say that while this is obviously McPhee — you can tell it’s him within a page or so — it’s one of the weaker McPhees. Which is praising by faint damns: McPhee’s style seems to have emerged fully-formed from his forehead at The New Yorker, and moved continuously upward in small, methodical steps. By the time we get to Uncommon Carriers, which I’ll review soon, the McPhee style has been honed to a keen edge.

A Sense Of Where You Are is also notable as a first glimpse at Bill Bradley: future Rhodes Scholar, future New York Knicks basketball player, future senator, future presidential candidate. One wants to say “All of the future Bradleys were there when McPhee wrote A Sense of Where You Are,” and that may be true: not only a great athlete, Bradley was the most admired man on the Princeton campus. And this isn’t just retrospective I-knew-him-whenism: A Sense of Where You Are came out in 1965, before anyone could know what Bradley would become.

If I tell you that this is a McPhee book, and if you’ve read McPhee, I can basically stop there. A McPhee book is characterized by a gentle forward motion propelled atop sentences that have no right to work as they do. The sentences are largely staccato, and in books other than this one they tend to feel like a sequence of random observations. In The Curve of Binding Energy, for instance, you feel like you’re reading a mere litany of facts about nuclear fusion which seemed interesting to John McPhee, yet by the end you really have learned a lot about the construction of a nuclear weapon, and the sentences more than merely hang together; they flow. It’s the strangest thing; McPheee routinely pulls off a nonfiction magic trick.

McPhee studies men at work. He quickly falls into their lingo, which is both one of the greatest irritants of his books and one of their key charms. It’s irritating because McPhee will often use a long string of disciplinary buzzwords before defining them; this reaches its nauseating pinnacle in Annals of the Former World, where we’ve absorbed a couple hundred pages of dense geological concepts before McPhee gets around to telling you what those concepts mean. It’s charming because you feel like you’re right in the thick of the action with citrus pickers in McPhee’s Oranges; with truckers, ship captains, and UPS employees in Uncommon Carriers; and with basketball players in A Sense of Where You Are.

McPhee follows Bradley on and off the court; when not watching Bradley — the greatest basketball player, apparently, at the time McPhee wrote, and by some measure the fourth-best athlete on earth — he’s asking Bradley to walk, step by step, through how he negotiates difficult problems on the court. Standing in McPhee’s kitchen, one imagines, Bradley pivots, feints, dodges and leaps to show McPhee exactly how his mind works. It’s absolutely captivating.

It’s also a lot of hero-worship. It’s a beautiful work, but a bit adulatory for my tastes. Orangemen, truckers, pilots, and nuclear engineers surely fascinate McPhee, and he respects them for the difficult tasks that they get done, and moreover he writes about them from the thick of the action, but somehow he manages in those later works to stay above the fray. By contrast, John McPhee is godfather to Bill Bradley’s daughter.

Don’t let that dissuade you, though. If you love McPhee — and if you don’t, you must not have read him — dive into A Sense of Where You Are and observe two great men at work.

I’ve still not entirely explained the virtue of a public option to myself, at least as compared to possible alternatives. Imagine this alternative:

• All insurers must accept all possible policyholders. I believe this is called “mandatory issue.”
• All insurers must charge exactly the same price to all policyholders (“community rating”).
• All insurance policies must either a) meet a minimum standard, b) come from a menu of options, or c) be of a single type. As the simplest case, imagine that there’s only one type of insurance policy, offering a gold standard of coverage for all possible ailments. This policy also has a $0 deductible, no lifetime or annual caps on medical expenses, etc.

If the third bullet were satisfied, the only comparison we’d ever have to make between plans are a few numbers, namely the co-pays. I am a bear of very little brain, and I can’t be expected to compare varying coverage policies for different types of cancer, lifetime caps, etc., etc., etc. Reduce everything to one number.

Under such a system, customers would naturally gravitate toward the cheapest insurer. They would know exactly what to expect from their insurance, so the only thing worth comparing would be the price.

What does a public option add to this? The idea behind the public option is the idea behind Medicare: since Medicare doesn’t need to spend time finding reasons to reject customers, its overhead is lower. (My favorite example of a reputed insurance-industry tactic is rejecting coverage for florists, on the hypothesis that florists are more often gay and therefore more likely to have AIDS. I’ll look around for evidence that they actually do this.) Medicare is also nonprofit, so there’s no profit overhead. And so forth.

The customer-rejection overhead would go away if insurance companies were required to accept all comers. Profits should go down if insurers competed on price. In fact, if insurance companies were heavily federally regulated, we could get rid of the state insurance-regulation overhead, and could allow insurance companies to compete across state lines. The main reason people have objected to interstate insurance competition recently is that different states have different regulations, and people expect a race to the bottom: which state legislators can we buy off most cheaply to provide the crappiest insurance? If there were a very high floor below (and maybe also a very low ceiling above) insurance, this sort of shopping wouldn’t be possible. Competition would flourish.

So with intense private-insurer regulation, I can’t exactly see what the public option would add. Private insurers would race against each other to offer the cheapest service for the same quality good. Overhead would presumably head toward zero as well.

The two arguments I can see for a public option, as against this private regulation, are 1) that it’s much simpler to offer your own gold-standard plan than it is to regulate everyone else’s, and 2) that the public option is a political winner in a way that private-market regulation isn’t. I think both of these are wrong.

First, a public option comes with its own load of difficulties. If the public option is required to allow anyone to join, it’s likely to draw the sickest patients — the ones whom private insurers wouldn’t accept. Indeed, private insurers would probably reject their sickest patients in even greater numbers than now, secure in the knowledge that the public option would pick them up.

In response to this dumping, two main options present themselves: either restrict private insurers’ ability to cherry-pick patients, which brings us back to where we started, or somehow subsidize those insurers (public or private) with the sickest patients. Germany’s insurance system does this: sickness funds with sicker patients get money from funds with healthier ones; sickness funds with older patients get money from those with younger ones; etc. A public option would need to do something like this, to avoid immediately collapsing under its own weight.

As for the political impossibility of private-market regulation: health reform is just a hard political problem. We’ve been trying to get it done since Truman. Are we going to do it right? Or are we going to try an experiment now and lock ourselves out of meaningful reform for another 40 years? A public option, while important, doesn’t answer the questions its supporters think it does.

The health-care bills under consideration today all contain a few moving parts:

• An individual mandate, requiring everyone to have insurance or pay a fine.
• An employer mandate, requiring employers to “pay or play”: provide insurance to their employees, or pay into a fund.
• A public option: a government insurer.
• Regulations on private insurance.
• An exchange, where people not covered by employment-based insurance could choose among various private insurers (or choose the public option).
• Federalizing Medicaid, which is currently administered by the states.
• Reducing or removing altogether the employer deduction on health insurance.

Not all plans offer all these options, but this seems to be the menu from which all plans choose.

Wouldn’t it be orders of magnitude simpler to expand Medicare to cover everyone? We already have Medicare in place, so we already have plenty of employees trained to do the job. We wouldn’t need to add a bureaucracy for the exchange; we wouldn’t have to add a bureaucracy for the mandate(s); we wouldn’t have to add a bureaucracy to regulate private insurance.

I realize that this may be politically impossible. A couple remarks on political impossibility:

1. Why not start with the larger, better, bolder idea, and compromise down to a public option + exchanges + etc. when you need to, rather than starting with the weaker plan?

2. Does “politically impossible” mean that Democrats won’t support it, or that Republicans won’t? Republicans won’t support anything, so this isn’t an argument against Medicare-for-all.

As an ethical and strategic matter, it seems ridiculous to me that we would bother compromising with the Republicans over health care. And now they’ve shown that they don’t intend to compromise: even the “co-op” idea that Senator Conrad has proposed smacks of government-run health care, if you’re an extremist Republican.

My hope is that they’ve shown their cards too early: it’s now obvious that their only aim is to defeat any health-care reform whatsoever. This should already have been fairly clear, when not a single House Republican voted for the stimulus bill. They’re not interested in constructive governance; they’re interested in saying no to whatever the Democrats want, with the aim of weakening Democrats before the 2010 elections and reclaiming Congress then. Anything the Democrats succeed at during their time in power is something they can hold against the Republicans. Major social programs, like a dramatic expansion of health insurance to nearly 50 million (!) Americans, are a major check against the Republicans. They therefore can’t let it happen.

This must be obvious to those in power; I am in no way politically astute, and I’m just repeating what is, by now, the accepted wisdom on all of this.

When President Bush submitted a bill to the Congress, he asked for way more than he could plausibly get, then “compromised” down to something that was only minorly ridiculous. When Obama submitted the stimulus bill to Congress, he asked for less than he needed to get Republican votes, then didn’t get those votes. Now Kent Conrad, a Democrat, is proposing a health-insurance “co-op” that solves no substantive problem, but apparently “solves” a political problem. I will advance a brave forecast now: the co-op will solve no political problem, either. Either we solve the substantive problem on our own, or we don’t solve it at all.

Fundamentally, two things appear true:

1. The Republicans don’t view 50 million uninsured people as a problem.
2. Democrats will have to vote on a bill that they know is right, but which has been successfully demagogued. They will have to risk losing their offices.

There’s the slightest bit of data that Obama will allow himself to be a one-term president if it means securing health reform. I hope that’s true. The victory of health reform will mean a long-term restoration of the social safety net, and will therefore mean the empowerment of the party that defends the social-safety state.

But that will only happen if the Democrats stop senselessly compromising away their principles to a party that will never compromise.

I can do no better than to quote Ezra Klein, so I won’t try.

Dana Gould reports from the tea parties and the free care clinic and finds something odd: The people at the tea parties are screaming and angry and furious about bad things that aren’t happening to other people in some future universe. The people lined up at 4 a.m. outside the free care clinic are resigned and polite and measured about horrible things that actually are happening. To them. Right now.

It’s a short book, and it’s candy, so I won’t take much time to review it. I’ll just say this: it’s very funny, and will keep you laughing constantly for an hour. The first essay alone is reason enough to read the book; I include that essay in its entirety below.

Don’t buy the book new, though, unless you plan to lend it out and/or resell it and thereby extend its life. It’s $12 for an hour’s reading.

Then Abraham tied Isaac up and laid him on the altar over the wood. And Abraham took the knife and lifted it up to kill his soon as a sacrifice to the LORD. At that moment the angel of the LORD shouted to him from heaven, “Abraham! Lay down the knife.” … Then they returned to Beersheba. — Genesis 22

The Ride Back to Beersheba

How about some ice cream, Isaac? No? Are you sure? I’ll tell you what, I’ll get us some ice cream. Want some ice cream? I’ll get us some ice cream.

Wow, there is nothing like camping! Cooking your own lamb, building your own pyre … and no women! Just a couple of guys in the woods, lighting fires, doing stuff, and keeping it between themselves! Speaking of which, did you ever notice how your mother sometimes gets ideas? I mean, she raised you and I love her, but she’s a very nervous person. All I’m saying is sometimes it’s all right not to tell her about certain things. Like guy things.

Wow, I just noticed that you have huge muscles! You’re really getting strong! When did you get so big and strong? Soon you’ll be a real strong guy!

Let me explain something to you. Sometimes, grown-ups have to do grown-up stuff that children don’t understand. I think there’s an ice cream place coming up. Like, what happened on top of the mountain? Do you remember? Of course you … of course. Anyway, that was a thing for grown-ups.

How about some Rocky Road? Chocolate? I’d get you some strawberry, but hey, your name’s Isaac, not Isaac-Marie — am I right? Ha! Seriously, though, if you want strawberry I’ll get it for you. I’ll get you whatever you want.

So anyway, let’s rehearse. I’ll be your mother. “Isaac, how was your trip to the mountain?” Okay, then you would say something like “Pretty normal.” That’s not too hard, right?

We’re almost home. Listen, I probably shouldn’t be telling you this, but your mother is very sick. She’s sick, Isaac. And the slightest shock might kill her. Hey, there she is, waving at us! Hi, Sarah, we’re back! Put a couple lambs on the spit — you’ve got a couple hungry lumberjacks on your hands! Ha, ha! She’s very ill, Isaac. Very ill. Wow! … Camping.

Longtime readers know that I am a huge fan of Richard Thaler. This is why I really don’t understand how he wrote this week’s Economic View column (via the Nudge blog). Coming from an economist, I find Thaler’s use of terms surprisingly slippery. E.g.,

A second detail is whether the government will grant the public plan the power to impose special deals with suppliers like hospitals and drug companies — a move that would dampen, not enhance, competition with the private sector.

I don’t even understand what this means, and it’s not clear to me that Thaler does either. Does Wal-Mart impose “special deals” on its suppliers? Of course it does. Its size allows it to do this. Why shouldn’t a public option be entitled to use its size to extract deals, just as any other private entity should?

Look also at existing models: Medicare imposes “special deals” on hospitals, yet my understanding is that these are perfectly voluntary. Medicare pays the hospitals less than private insurers do, but the hospitals could start rejecting Medicare if Medicare’s terms ever got too onerous. Why is this model not one that “ObamaCare” should follow?

Thaler asks,

Here is a thought experiment: Can you think of a domain where a government-run business competes successfully with private-sector companies?

which strikes me as completely disingenuous. What about Medicare? Medicare exists — and I will never tire of repeating this — because the elderly are uninsurable. Medicare, to an extent, isn’t even competing with private insurers, because those insurers have decided not to play the game. Government’s role is most legitimate when the market manifestly fails to provide a service.

No one competes with the government on printing currency. Why not? It’s instructive to look back at an earlier era, when there were lots of private currencies. That equilibrium was unstable, and fiat currency took over. Without looking very hard, I’m convinced that we — and certainly a diehard empiricist like Richard Thaler — could find plenty of examples in this direction.

When Thaler writes that

The Postal Service offers another instructive lesson. When it periodically starts running deficits (as it is now) and proposes cost-saving measures like eliminating Saturday delivery or closing tiny post offices, Congress often intervenes under pressure from predictable interest groups like bulk mailers, the 600,000 postal employees, and the users of those tiny offices.

he’s correct, but not as correct as he thinks. First of all, Medicare can’t run a deficit: part A is funded out of a fixed fund. So depending on the structure of a public option, it needn’t run — could, in fact, be forbidden from running — a deficit. Secondly, most of the talk about a public option, and about insurance regulation generally, has centered on taking some regulatory power away from Congress. Ezekiel Emanuel’s book, to pick but one example, is centered on this idea. I have problems — as I mentioned in that review — with how easily people look to throw off democratic control, but I understand the motivation.

Then we get the canard:

One reason is that governments are not very good at innovation.

I read that sentence on the Internet. It used to be called ARPANET.

Governments can be great at fostering innovation, if not at innovating on their own. This is how the government spends billions of dollars each year sponsoring graduate students in the sciences, among many other things. If Thaler thinks that the private sector would allocate this money better than the government, he should by all means say so.

Then we have a bit of bowing and kissing to the GOP:

To the Republicans, I say this: If you can get real assurances that the public option has to break even, and that it will get no special deals from suppliers, let the Democrats have it but ask for concessions on tort reform in return. (That could actually save some money.)

Maybe a fine idea, but what’s the goal? Presumably to keep bad doctors out of operating rooms and to punish those who are egregiously bad. Too often, the GOP’s insistence on tort reform seems based more on a broad hatred of lawyers and on a desire to appease their corporate donors. It’s rare that I hear people explain what actual benefits will come from tort reform. The dollar volume of malpractice lawsuits, I read somewhere recently, is in the tens of billions of dollars annually — a hundred billion at most. (I’ll hunt for a citation.) Even suppose this is $100 billion, and that it drops to $0 — which is an unreasonable goal. Health care is about 1/6th of the U.S.’s $14 trillion GDP, or about $2 trillion. If I have my numbers right, then, entirely eliminating medical-malpractice lawsuits would reduce our current health-care expenditures by 5%. The aging of the baby-boom generation would erase these gains quickly.

Thaler concludes in the economist’s classic tone of condescension:

To the Democrats, I say this: If you want competition in health care, you won’t get it if the public option can make deals its competitors can’t. So either give the Republicans hard assurances that the public option would have to break even and not get special treatment, or, better yet, just give it up to ensure that some useful health care reform is passed. A public option is neither necessary nor sufficient for achieving the real goals of reform, and those goals are too important to risk losing the war.

Again, what problem is Thaler trying to solve, and what would he advance as an alternative? A public option is supposed to set a gold standard against which other plans are judged: it’s community-rated (same rates for everyone), can’t reject anyone, offers coverage for a long list of ailments, and so forth. It sets itself against insurance that can be revoked in the midst of a crisis, at precisely the moment when the “insured” needs it most. Indeed, from this perspective a public option could end up failing because it’s burdened in a way that private insurers are not: Blue Cross/Blue Shield was community rated half a century ago, and lost out to private insurers that didn’t play by the same rules. If a public plan is forced to provide a high standard of coverage, then it will draw the sickest patients. If it’s forced to break even, it will then be required to raise its rates. By raising its rates, the healthiest patients will drop out and go to cheaper private insurers. This is adverse selection once again.

So the structure of a public option is vital. Thaler ignores every last one of the details that makes it important, so convinced is he that it’s a bad idea. He has subtracted from the discourse. I expected better from him.

There’s some justifiable fear that a public health-insurance plan wouldn’t compete on a level playing field with private insurance, and would therefore necessarily kill off private insurers.

I say “justifiable,” but it seems pretty clear that this needn’t happen. One word provides the evidence: Medigap. It turns out that Medicare doesn’t cover everything that the elderly need. A full review of The Political Life of Medicare is forthcoming, but suffice it to say that “cost control” has been the guiding theme of Medicare more than has “expanding benefits.”

So Medicare doesn’t cover every medical bill. This leaves room for private insurers to cover what Medicare doesn’t. The insurers that fill in that gap are known as “Medigap” providers. “On average,” says The Political Life of Medicare, “the elderly carried 1.25 supplemental policies per person, and private insurance policies paid for approximately 7% of medical care expenditures for the elderly in 1984.”

The extent of Medigap coverage — the 7% — will vary with how extensive cost sharing is in Medicare. Set the Medicare deductible high enough, and the market for private insurers will grow larger. But note that Medigap is parasitic on Medicare: “Over 24 years after Medicare’s enactment, fewer than one-half of such policies covered prescription drugs [Medicare Part D hadn't yet been enacted -- SRL] or any physician bills in excess of what Medicare paid as ‘reasonable charges.’” The insurance market for the elderly will not form on its own; the elderly are uninsurable, which is why Medicare exists.

Medicare reimburses providers less than private insurers do, which is why Medicare payments have famously risen less than private insurance payments. I don’t understand all the contours of Medicare just yet, but one thing is important to note: it’s voluntary. Hospitals can choose not to honor Medicare. The fact that they continue to do so suggests that the government isn’t squeezing them too hard. If a public option were just an expanded version of Medicare, it would continue to be voluntary. If it ever squeezed doctors too much, they could refuse to honor it.

Another reason to fear a public plan is that the government can print money, which private insurers can’t. The story goes that the government would offer a gold-plated insurance policy that needn’t break even, which private insurers just couldn’t do. Hence private insurers would quickly be driven out of the market.

Again, Medicare suggests that this fear is misplaced. Medicare Part A is financed from its own dedicated pool of money: 1.45% of your income comes out of every paycheck to pay for Medicare insurance, and your employer chips in another 1.45%. That money can only be used for Medicare, just as the Social Security tax (6.2% each from you and your employer, on the first $106,800 of your income) can only be used for Social Security. The fact that this money is in a separate bucket means that Medicare and Social Security can go bankrupt; this is why we only ever hear about the impending insolvency of Medicare and Social Security, never about the insolvency of the Department of Defense. The DoD is funded in a totally different way, and the government really could keep it going by printing money.

Why couldn’t universal health care be funded by a dedicated tax that goes into its own special bucket? Wouldn’t this deflate the fears of those who think that a public plan and private insurance would be playing on an uneven field?

If we look to Medicare, I think we’ll find that a lot of our health-insurance questions have answers. And Medicare at least holds open the possibility of transparent decisionmaking: every year, Congress and the various oversight boards discuss Medicare’s future solvency; actuaries dutifully compute dates to exhaustion based on public demographic statistics. Private insurers compute this sort of thing in secret. Medicare has public criteria for determining whether a procedure is covered; insurers increase their profits by secretly coming up with more-clever ways to deny coverage to those who need it.

One conclusion from The Political Life of Medicare is pretty clear: Medicare teaches us more about how to cut costs than it does about how to protect against sickness. The universal health care we should aspire to is much greater than we’ll ever get from Medicare. Medicare was a good start.

I think I called it.

(Via my roommate Paul.)

You’re hooked on this book from the moment one of Thurmond’s aides sends the late senator a verbose, effusive, bootlicking letter telling the old man in the most roundabout way possible that the senator, more than anyone else, is in a position to tell the history of the African-American people, and Thurmond responds, essentially, “Whuh? And who are you?”

Thurmond, of course, is one of the most famous racists of the 20th century. By the time we’re done with A History of the African-American People (Proposed) by Strom Thurmond, as told to Percival Everett & James Kincaid, we — or at least I — actually feel a little bit better about the man. A History tugs you in a few directions, but mostly it’s just funny.

From the moment the senator responds confusedly, his aide is off and running with his book proposal. He offers the book up to a publishing house, and insists — charmingly, offensively, and always humorously — that he be the publishing house’s only contact with the senator. This aide is such a part of the senator’s life, he says, that words escaping from the aide’s mouth may as well be coming from Thurmond’s. Everyone buys this, at least for a while.

The book will be ghostwritten, and who better to ghostwrite it than Percival Everett, one of the nation’s foremost black authors, and his friend James Kincaid? It’s not clear how they feel about each other. It’s not clear, further, how much time Kincaid spends outside of a bottle (of alcohol or pills).

Everyone gets into and out of bed with everyone else, metaphorically or literally. The aide’s contact at the publisher is a harried executive trying to save his job as the industry declines, who’s constantly trying to sleep with his assistant. The assistant isn’t exactly sure where he lies on the sexual spectrum. Various people engage the assistant’s services as a double or triple agent. He ends up crying in the arms of Thurmond’s aide at some point, for some reason. Oh, and somewhere in there, a former prostitute ends up writing an autobiography entitled Class Ass. One of these folks ends up married to another publishing-house executive, who may or may not be connected to the mafia.

If I sound confused by the book, I’m really not: it’s just been a few weeks since I read it. But it wouldn’t really matter if I had just read it yesterday; the collected madnesses in A History make it the purest instance of a picaresque. You just jump on and enjoy the ride.