Posts Tagged ‘healthcare’


Today’s announcement that Angus Deaton was awarded the Nobel Prize in Economic Sciences was greeted in the usual fashion: plenty of versions of “a brilliant selection” (Tyler Cowen) and a few of the usual criticisms that economics is not really a science (Joris Luyendijk).

What I find interesting is that, like last year, the prize is given to a thoroughly mainstream economist—but Deaton’s work can be read as cutting against the grain of much of what has passed for mainstream economics over the years. Let me give a few examples:

First, Deaton spent a great deal of time trying to figure out how, at the microeconomic level, consumers distribute their spending among different goods. Basically, Deaton was telling his mainstream colleagues, “you just can’t assume demand curves are downward-sloping, for individuals and markets, and that actual consumer behavior is or is not consistent with the postulates of neoclassical utility-maximization, without actually measuring how consumers respond to changes in prices.”

Deaton’s work, at the macroeconomic level, was similar: he cast doubt on the existing mainstream theories concerning the relationship between consumption and income (based on representative-agent models) and suggested, once again, that it’s necessary to study how different consumers—some with falling incomes, others with rising incomes—actually respond to changes in incomes.

Third, Deaton used his work on demand and consumption to challenge facile models based on income per capita and exchange-rate-calculated comparisons of poverty across nations. He pioneered a consumption-based approach, based on cross-sectional surveys to determine actual consumption expenditures and levels of well-being, especially in Third World countries.

There’s no doubt that, in the end, Deaton’s work in challenging many of the existing theoretical and empirical models within mainstream economics—in the areas of microeconomics, macroeconomics, and development economics—were themselves firmly ensconced within and contributed to the further development of mainstream economics.

But the mainstream nature of that work has also permitted him to intervene in other debates, for example, concerning the effectivity of foreign aid (which, he argues, mostly helps keep nonpopular governments in power and does little to actually eliminate poverty), the role of poor health (which, as he sees it, is a result, not a cause, of poverty), and the current fascination with randomized trials (which fail to account for the causes of positive outcomes and, as a result, can’t be generalized to other problems and situations).

And, in the one previous mention of him on this blog, to sound a warning about growing inequality in the United States and other advanced countries:

The distribution of wealth is more unequal than the distribution of income, and very high incomes will eventually pupate into very large fortunes, ultimately leading to a hereditary dystopia of idle rich.

I’ll admit I’m of two minds about all the positive references to European socialism these days. I’ve read enough police procedurals by Per Wahlöö and Maj Sjöwall to know all is not well in the kind of social democracy that many countries in Europe managed to build in the postwar period. More seriously, I think we’re setting our sights too low if our horizon is limited to what some sectors of some European countries have been able to achieve (and, of course, what they’ve left untouched)—not to mention the forms of austerity European socialists have been attempting to manage after the crash of 2007-08 and their unwillingness to deal with the current massive inflow of refugees.

On the other hand, there’s something useful in challenging the constraints imposed on discussions in the United States by referring to the kinds of life and work people have been able to create in Western Europe. Bernie Sanders, to take one prominent example, refers to universal healthcare, free public education, better childcare, and higher wages in Denmark and Sweden as examples Americans might emulate.

And then there’s Chantal Panozzo’s description [ht: sm] of the differences between working in the United States and in Switzerland.

A hiring manager at an American company who interviewed me recently for a permanent position asked me how much vacation I wanted. When I said four weeks, which is the legal Swiss minimum, she paused and said O.K., but then informed me that I would need to check my phone and email during this time.

I responded that checking my email on vacation wasn’t my definition of a vacation. She didn’t know what to say. Finally, she grudgingly said they could write it into my contract that I wouldn’t have to check my email during vacation. But the situation made me wonder, once again, if a country that bred this kind of culture was a place where I wanted to spend the rest of my working life.

Later, when I asked a different American company about the possibility of working part time, four days a week, they said they didn’t know how that would work. I tried to explain how I had successfully worked part time in several jobs overseas — even creating television commercials while doing so, but it was no use. I was fighting a culture that was not ready for my “radical” Swiss ideas. The fact that it was my own culture — supposedly so advanced and creative — only made things worse.

So, what role does European socialism play in our current debates about life and work? Well, it shows, in a very concrete way, that things in the United States don’t have to be the way they are. “Look,” we can say, “they manage to do it over there. And we’re an even richer country. Imagine what we could do here.”

But then we can also say, there are more far-reaching changes we can make to enhance the life and work of the majority of the population—even more than European socialism has thus far been able to achieve.


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