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Codes of the Underworld: How Criminals Communicate
Codes of the Underworld: How Criminals Communicate
by Diego Gambetta
Edition: Hardcover
Price: $42.75
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12 of 14 people found the following review helpful
5.0 out of 5 stars Even more fascinating than you'd expect, February 9, 2010
Fascinating from start to finish. You can think of many reasons offhand why such a book would be endlessly captivating, but Gambetta will continually surprise you with the twists and turns in his subject.

Start with the obvious question: you're a criminal, and you want to communicate with your fellow-bad guys. How do you do it? That's intriguing on its own. If you know the other bad guy, you can vouch for him (or think you can -- see "Brasco, Donnie"). If you don't know him, you need to much more carefully apply the vetting that we use in the legit world: find someone you know who knows him, ask around about him, and so forth.

Obviously your big concern as an underworld fellow is the police. They're constantly trying to listen in on your communications, get fellow bad guys to turn state's evidence, and plant undercover cops in your midst.

When your organization reaches a certain level of success and infamy -- think of the Mafia here -- you now have a brand to protect. Rival organizations start claiming your name to strike fear into their enemies' hearts. To avoid brand dilution, you need to make sure that only those people who are actually in the Mafia say they're in the Mafia. Trademark law isn't going to protect you here, so you need to enforce your own brand.

And how do your establish your bona fides as a bad guy? One intensely fascinating thread in Codes to the Underworld has to do with commitment strategies: imposing some heavy cost on yourself -- some cost that absolutely no one outside the Mafia (or whichever group) would ever think of faking. Henry Farrell, over at Crooked Timber, excerpts one amazing bit on this score:

Erefaan's face is covered in tattoos. "Spit on my grave" is tattooed across his forehead; "I hate you, Mum" etched on his left cheek. The tattoos are an expression of loyalty. The men cut the emblems of their allegiance into their skin. The Number [the name of the hierarchical system in Pollsmoor prison] demands not only that you pledge your oath verbally, but that you are marked, indelibly, for life. Facial tattoos are the ultimate abandonment of all hope for a life outside.

Gambetta has spent decades studying the Italian mafia. He's a brilliant economic naturalist, with story upon story from the world out there. He's a gripping writer, to boot. Codes of the Underworld is one of the few works of economics that you'll be unable to put down. This may be because it's not recognizable, at first glance, as a work of economics. But its economic cred is pristine; it's filled with references to the great Thomas Schelling. Highly recommended, both for those who love economics and those who love The Godfather.

(I'd be remiss here if I didn't mention, by the way, Schelling's Micromotives and Macrobehavior. It's an boundlessly interesting piece of work.)


Competing Solutions: American Health Care Proposals and International Experience (Brookings Occasional Papers)
Competing Solutions: American Health Care Proposals and International Experience (Brookings Occasional Papers)
by Joseph White
Edition: Paperback
Price: $22.20
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3 of 4 people found the following review helpful
5.0 out of 5 stars Authoritative and magisterial, September 10, 2009
In a better world, everyone would have read this right around 1995, and by 1996 we would have had health insurance that listened to it.

Its first half is an utterly authoritative look at how health systems work in Canada, Germany, Australia, France, Japan, and the United Kingdom. In all of them, health insurance is guaranteed as a fundamental right of citizenship. In all of them, doctors are treated as a special, higher-caste class of worker, so in all of them, doctors must be handled with kid gloves. In Australia, for instance, malpractice cases are reviewed by a panel of doctors, which avoids making them feel like malpractice decisions have been imposed upon them by an ignorant jury. Some countries, notably Germany, have heavily regulated "sickness funds" run by corporations or unions, with transfer payments between the sickness funds depending upon their risk profiles (e.g., sickness funds covering mostly young, healthy people end up subsidizing those funds that cover older, sicker people). Others, like Canada, have insurance systems run mostly by the provinces. In none of the countries studied do they use a system like the one we're talking about in the United States, where people are required to buy insurance and have to pay if they don't buy it. For one thing, the administrative overhead of such a system is enormous. As White puts it,

"Individuals' incomes and needs for subsidy would change during the year, creating further difficulties ... . Such a subsidy program would require a choice between three unpleasant options: having a huge bureaucracy (to process all applications quickly and accurately), a smaller bureaucracy that was thorough but made people wait, or a smaller bureaucracy that was less thorough so as to reduce waits and that therefore made lots of mistakes."

There's an important distinction in here: people in other countries "do not pay a price for personal insurance; they do not shop; they contribute." As White puts it, "The international standard finances whole systems, not individuals, in a redistributive manner" (italics his). Funding health care is just another part of taxation, so the administrative overhead is tiny. "[T]he international standard risks little error," White writes, "is simple to implement, and provides a stable insurance system. Any system of direct subsidies to individuals has none of these features, yet still, if it is to be adequate, requires the same net transfers from people with higher incomes to people with lower incomes."

This was the part of Competing Solutions that struck me the hardest. The health-insurance conversation, at least since Hillary Clinton and Barack Obama were competing for the Democratic nomination, has been centered around the "mandate": whether people will be required to buy insurance. Those of us who toss around terms like "adverse selection" have had the policy upper hand: if people aren't required to carry insurance, only the sickest people will bother to get insurance, and the whole system will unravel. To the extent that the conversation veered off the mandate at all, it was to discuss the politics of the mandate. Literally no one, in any of the reading that I've done over the last two years, has discussed the wisdom of structuring a system like this. Which is odd, when you think about it, because the conversation has even more broadly been about cost control rather than universal access; you'd think that restructuring health insurance to look more like Medicare and in the process lower administrative costs would have been at the top of the list. Yet it was literally nowhere to be found. Another example of redefining "left-wing."

I don't mean to focus too much on this part of White's book, which is really only a few pages toward the end. The funding section illustrates a pervasive feature of Competing Solutions, however: White's absolute, from-the-ground-up, magisterial grasp of health-insurance issues, quite often leading to realizations that wouldn't otherwise have occurred to me -- debate in this country being as radically circumscribed as it is. White's book is the very best of academia: slowly, patiently, methodically, and fairly covering an issue from every angle, with surprise the natural product of honesty.

White focuses on far more than just insurance; Competing Solutions is a guide to the reform of entire health systems, as practiced in other countries and as it could be practiced here. It addresses issues like how to encourage doctors to work in rural areas ("Wildavsky's law": "even Stalin and Beria couldn't get doctors to move to the countryside"); how to discourage capital over-/under-invesment, for instance in MRI machines; whether the government should pay for medical education; and, of course, the dreaded "rationing."

If this book were in everyone's hands, we could all turn to the sections on France whenever someone holds it up as an example of Eurosclerotic creeping socialism, and look at bits like this:

"Private insurance has different functions in France and Germany. In Germany it provides special convenience to some persons who are willing to pay higher fees to providers. In France it provides some supplemental benefits and compensates for cost sharing."

What's that? France has private insurance? Indeed:

"just as most Americans on medicare [sic -- White is diligent about not capitalizing the word] purchase medigap policies, over four-fifths of French citizens obtain supplementary coverage. Usually they obtain it from "mutuelles," which are descendants of the guild funds. Mutuelles pay for both cost sharing and some extra benefits. Hospitals and the private clinics bill a patient's mutuelle directly for coinsured inpatient care. A few mutuelles run their own clinics, at which the patient need not lay out any cash for ambulatory care. Private insurance provides some of the same coverage. But private insurers do not have clinics; they risk-rate [i.e., charge premiums that vary with how healthy they think the patient is], and the government favors mutuelles with a range of tax policies. Therefore even some insurance company workers have their own mutuelles!"

(Internal footnote omitted.) There's a hell of a lot of information in that paragraph. This book is dense, in a great way. Even the footnotes are charming: in one, which lists six foundational documents beneath the Clinton "managed care" plan, White writes, "[F]or a summary that expresses the beliefs of some remarkably uninformed supporters, see ... ." At the end of that note he writes, "In 1994 the group produced a watered-down version that violated much of their original analysis. At best it was a concession as a matter of political realism; at worst, it represented the real interests of the group's paymasters, large insurance companies."

That's where the book is driving, the whole way through: the intellectual incoherence and obvious insufficiency of every mid-90s American health-care plan. Thank god for the Congressional Budget Office, truly: Ira Magaziner and the others tried very hard to produce a bill that "looked like America," in the sense that it doesn't resemble what every other country on earth already does. The CBO, quite rightly, replied to each of them that they need evidence before they'll claim that these bills save real money. As White, in his biting way, puts it:

""How can you say it can't be done?" a member of the Clinton administration's working groups on health care reform reports being continually asked by the groups' director, Ira Magaziner. "It's never been tried before!" One might reply that if something has never been done before, that is not the strongest evidence that something is possible. But when analyzed piece by piece, the case for managed competition without a global budget does not hold up. Both the competition and the management have been oversold."

The competitors to the Clinton plan, namely the Chafee and Cooper-Grandy bills, were even worse. No one wants to issue a "Medicare-for-All" bill, it would seem, and even after all this reading I still can't figure out why.

So I can't recommend highly enough that you read this book. I hope it has as much of an enlightening effect on you as it did on me. It's the sort of book that I will undoubtedly return to for years, tapping one vein or another of health-system knowledge. Competing Solutions is inexhaustible.


What I Talk About When I Talk About Running
What I Talk About When I Talk About Running
by Haruki Murakami
Edition: Hardcover
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1 of 2 people found the following review helpful
5.0 out of 5 stars An inspiring gem, September 7, 2009
What a gem, this book. It's inspiring, it's a quick read, and it makes me desperately want to get back on the road running. Plus, it's an abrubt 90-degree turn away from everything else I've read by Murakami. For one thing, it's a memoir. But it's such a simple, honest, charming memoir, as well; you can't help but love Murakami by the time you're done.

The picture we get of Murakami is of a very mortal human being, talented and intelligent but more diligent and focused than anything else; these the same attributes have allowed him both to write a novel every year or so, and to run at least one marathon in the same interval. I was reminded of Stephen King's description of how he writes, from the intro to The Stand (revised, uncut, and excessively long edition):

When asked, "How do you write?" I invariably answer, "One word at a time," and the answer is invariably dismissed. But that is all it is. It sounds too simple to be true, but consider the Great Wall of China, if you will: one stone at a time, man. That's all. One stone at a time. But I've read you can see that m****r****er from space without a telescope.

Or Nora Roberts's method, as revealed in her New Yorker profile:

At Vesta, she said that she has one key commandment of writing: "[Butt] in the chair."

Murakami's writing and his running, he says, both have this one-stone-at-a-time, butt-in-the-chair method behind them. He runs every day, even on days when he doesn't want to. He sits his butt in the chair and writes. He keeps at it; eventually, with lots of hard work, a novel appears on the other end, and he finishes a marathon.

The reader -- this one, anyway -- could be excused for thinking that this humdrum tone is false modesty: that beneath it all, Murakami writes a lot and writes well because he's brilliant. He wouldn't deny for a moment that one needs a measure of talent to be a writer, but he says focus and discipline are at least as important.

You might wonder whether Murakami thinks of clever plots for novels while he's running. Turns out he doesn't; he just listens to a lot of music and zones out. His zoning-out reached its peak during a 60+-mile ultramarathon in northern Japan. There he felt for 10+ miles that he wouldn't be able to make it, but he just.kept.pressing.on. Eventually he reached a state where he could no longer feel pain, and where thoughts flowed in one ear and out the other. He reached the finish line after passing many of his fellow marathoners. He has completed one marathon annually for the last 20-some years, ever since his early thirties.

That's one of the reasons why What I Talk About... struck me so strongly. I got my start running last year, and had gotten up to really enjoyable 45-minute runs, when my flat feet knocked me out of commission and made my left ankle continuously achy. I've been itching to get back into running, trying to find a doctor who won't tell me, "Your feet are too flat; you should never run again." Murakami's book is the inspiration I need, both to get back on the road and to write a book I've envisioned. One foot in front of the other, butt in the chair.

Finally, not a small part of What I Talk About...'s charm, for me, is that much of it takes place within Cambridge, Massachusetts. Apart from indicating that he taught at Harvard and gave some lectures at MIT, it's not clear why Murakami was here, but he was, in the middle of this decade. He lovingly describes his runs along the Esplanade, often getting passed by comely Harvard undergrads; he has a real appreciation for my beloved city, which can only endear him to me.

What I Talk About When I Talk About Running is a quick read. It's inspiring and charmingly unassuming, and a perfect little delight.


A Sense of Where You Are: Bill Bradley at Princeton
A Sense of Where You Are: Bill Bradley at Princeton
by John McPhee
Edition: Paperback
Price: $10.93
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5 of 5 people found the following review helpful
4.0 out of 5 stars Classic McPhee: exploring the minds of men at work, August 31, 2009
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.


Uncommon Carriers
Uncommon Carriers
by John McPhee
Edition: Hardcover
Price: $18.50
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2 of 2 people found the following review helpful
5.0 out of 5 stars Boats, trucks, and planes. Absolutely captivating., August 31, 2009
This review is from: Uncommon Carriers (Hardcover)
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.


Kafka on the Shore
Kafka on the Shore
by Haruki Murakami
Edition: Hardcover
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1 of 1 people found the following review helpful
4.0 out of 5 stars It's easier to get into Murakami as a storyteller than as a philosopher, August 31, 2009
This review is from: Kafka on the Shore (Hardcover)
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 woman of the night after a "totally artistic act of [pleasuring a man]," 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 manual stimulation 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 manual stimulation makes a bit more sense, but I can't escape the suspicion that a lot of highbrow male authors think, "Unwarranted sexual climax? 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."


The Political Life of Medicare (American Politics and Political Economy)
The Political Life of Medicare (American Politics and Political Economy)
by Jonathan Oberlander
Edition: Paperback
Price: $21.05
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3 of 3 people found the following review helpful
5.0 out of 5 stars Great introduction to Medicare financing and the politics bound up with it, August 31, 2009
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.


The Logic of Health Care Reform: Why and How the President's Plan Will Work; Revised and Expanded Edition (Whittle)
The Logic of Health Care Reform: Why and How the President's Plan Will Work; Revised and Expanded Edition (Whittle)
by Paul Starr
Edition: Paperback
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5 of 6 people found the following review helpful
4.0 out of 5 stars Good American Prospect wonkiness about health-insurance reform, August 31, 2009
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.


Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration
Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration
by John Sutton
Edition: Paperback
Price: $45.00
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5.0 out of 5 stars Terrific introduction to the industrial-org literature, and a revolution in economic method, August 31, 2009
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.


After the Quake: Stories
After the Quake: Stories
by Haruki Murakami
Edition: Paperback
Price: $10.88
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3 of 4 people found the following review helpful
3.0 out of 5 stars Self-referential, vaguely dark, not very interesting, August 31, 2009
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 business, 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.)


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