The Long View 2008-04-07: Soviet America; McCain & Conservatism; Charlton Heston & History
Here is a fun bit of history from John J. Reilly:
We should remember that the USSR was not a welfare state, no more than an army is a welfare state. Social provision in the USSR was supposed to be universal, but this was not usually accomplished directly by state bureaucracies. Rather, education and health and retirement were provided by the enterprises for which people worked, as part of their compensation package. This was part of the reason the USSR favored large factories and farms; each of them was, in effect, supposed to function as a complete community.
Precisely the same thing happened in the US with regard to medical care. This social function was absorbed by employers, and for much the same reason; it was a way to compensate workers without giving them higher wages.
Soviet America; McCain & Conservatism; Charlton Heston & History
The American health insurance system is fundamentally mysterious. The real question is not "why does it produce mediocre vital statistics?" or "how does it manage to cost so much?" but "what the hell is it?" As we have already noted in this space, it's not an insurance system at all, but a transfer system. That's not the really mysterious bit, though; health costs in every developed country are paid by transfers of money from the well to the ill, and especially from the young to the old. The mystery is why, only in America, has it turned into a blob that threatens to eat the whole service-sector economy and crush what's left of manufacturing?
I think I have a solution, suggested by the principle that institutions that appear at about the same time are likely to be subtly marked by their period. The American health-payment system arose at the height of the Cold War, simultaneous with the development of the Soviet system in its classical (post-Stalinist) form. That was the era in which Western observers noted the "convergence" of the economic systems of the US and USSR. The medical industry was not what they were usually thinking about when they said this, but the parallel is now clear.
We should remember that the USSR was not a welfare state, no more than an army is a welfare state. Social provision in the USSR was supposed to be universal, but this was not usually accomplished directly by state bureaucracies. Rather, education and health and retirement were provided by the enterprises for which people worked, as part of their compensation package. This was part of the reason the USSR favored large factories and farms; each of them was, in effect, supposed to function as a complete community.
Precisely the same thing happened in the US with regard to medical care. This social function was absorbed by employers, and for much the same reason; it was a way to compensate workers without giving them higher wages.
This sort of system has its merits, but market flexibility is not one of them. As Soviet managers learned during the reform period of the late USSR, these benefits made hash of the real costs of labor. The system could function only by direct and indirect subsidies from the state, which were based on political rather than economic considerations. Again, the same thing happened in the US, where the tax system's whimsical preferences regarding health-care options interpenetrates the balance sheets of businesses large and small, like tree roots slowly pulverizing a concrete sidewalk.
People who recognize the lethal effects of folding medical costs into employee benefits often recommend, as an alternative, that the "insurance" function should be privatized. Each worker would have an individual policy, a policy that would be portable from job to job, or into unemployment. This line of solution would have the remarkable effect of eliminating the chief virtue of the current system, which is its economy of scale. Privatization would mean privatizing the administrative burden of operating the medical transfer system. Such an innovation might not be well received.
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William Kristol recently spoke to many of the same people who defend America's Soviet medical system as the cynosure of market economics (though not on that subject). He found them predictably confused about the prospects for this year's presidential election:
It began with a series of conversations with a group of Weekly Standard subscribers. Then, last week, I had lunch with the only three conservatives in Cambridge, Mass.; participated in an event in New York with the leadership of Vets for Freedom; mixed and mingled with Republicans before a speech in Michigan; and, on Friday, attended a reception for friends of Bill Buckley after his memorial service at St. Patrick’s, then discussed politics that evening with conservative college students at Georgetown University.
Apart from accumulating a few frequent flier miles, what do I have to show for my travels? I can report that lots of conservatives and Republicans expect Barack Obama to be our next president....But a surprising number of Democrats with whom I’ve spoken expect a McCain victory. One told me he was struck by the current polls showing a dead-even race, suggesting both a surprising openness to McCain among Americans who disapprove of Bush and a striking hesitation among the same voters about Obama.
Movement Conservatism in the United States is facing a "what have we lived for?" moment. If John McCain can win by a landslide, or even a respectable majority, without cultivating "The Base" and by appealing to voters outside the South and Midwest, then there will be nothing left of Movement Conservatism's vision of the future than a pumpkin and six white mice.
Why so? Let us consider another Soviet-era analogy, this time by way of a Russian political joke:
President Brezhnev wanted to show his mother how well he had done in life, so he took her on a tour of his private and public holdings. He showed her his dachas, the Czarist palaces reserved to his use, his fleets of luxury cars. Finally, Mrs. Brezhnev said: "All very well, Leonid, but what will you do if the Reds come back?"
If we are to believe Jonathan Rauch in the current (May 2) issue of The Atlantic May, the people who have been presenting themselves as "conservatives" these last 40 years may be presented with just that problem by John McCain:
Alter Washingtonians were treated to an odd juxtaposition not long ago. John McCain was boomed at the Conservative Political Action Conference, the big annual gathering of the right-wing tribes, while trying to establish that he was a conservative. On the same day, across town at the American Enterprise Institute -- another conservatives stronghold -- Newt Gingrich, the former House speaker, was warmly received when he touted on new book called Real Change. Never one to go underboard, Gingrich called for "explosively replacing the failed bureaucracies of the past."...[T]he irony of the contrast seemed lost on the conservatives ... Thus spake James Dobson , the head of Focus on the Family and a leader of the Christian right: "I am convinced Senator McCain is not a conservative." He's not one of us, these conservatives have insisted.
Actually, they're not one of them. But he is.
[The booers] might have noticed several mentions of Ronald Reagan. No surprise there. But McCain also went out of his way to invoke another conservative luminary, pointedly quoting him twice. That was Edmund Burke... [No] less than their left-wing peers, right-wing baby-boomers like to suppose it was their destiny to reshape the world...[After the Goldwater campaign of 1964, conservatives] came to associate themselves with a romantic narrative of radical change -- a narrative of counterrevolution, but revolutionary all the same.
Senator McCain is a bit too old to be a baby-boomer; Barack Obama is a bit too young. This may not be an accident.
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Regarding the passing of Charlton Heston, I note this comment by Jerry Pournelle, who once had a long talk with him:
We talked about a lot of things. I asked about his career, and he said it was largely getting breaks, but then he added, "Of course you have to be ready to take advantage of breaks."
"Hah," said I. "In the last analysis, luck comes only to the well prepared."
"Von Moltke," said Heston. "I read military history too."
Heston was a serious student of history. That's part of the reason he did all those historical epics; that and the fact he looked like a national monument. Let us hope that we soon see his like again in Hollywood.
Copyright © 2008 by John J. Reilly
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