Wednesday, April 03, 2013

Why can't we have nice things? Savoia & Sowa's "Marzi 1984-1987" (Part 3 of my "rethinking economics" series)

Three young girls in a friendship triangle, jostling over which two are best friends. One friend is distraught about not getting accepted into a coveted ballet class (pronounced "not skinny enough" by a teacher who had, herself, not quite made it into a prestigious ballet company), and the other two are left with mixed feelings about their own elation at getting accepted. Seeing strange new things while visiting cousins in the country; enduring marathon mass services with a very pious mother. Sylvain Savoia & Marzena Sowa's Marzi is full of scenes from growing up that are easy to relate to -- making the unfamiliar aspects of the setting all the more vivid and striking. You see, the story of Marzi takes place in Poland, under communism.

As you might expect, Marzi's young experiences involved things like standing in long lines in the bitter cold, waiting for the opportunity to buy a little bit of meat from a tiny shop that doesn't have enough for everyone, and rushing out to another shop to buy as much toilet-paper as possible as soon as the neighborhood gets news that there's been a delivery. Marzi's experience involved being downwind from Chernobyl and not knowing whether she would be permanently affected, despite the precautions he family took. She also recounts getting fine new refrigerators from Russia (and having almost nothing to fill them with) and seeing her parents hoarding cash (including US dollars) to buy things on the black market in case of emergencies.

Yet even the seemingly-unfamiliar components of the story recount universal human experiences. Marzi was happy with her cloth doll until her friend got a Barbie doll. As always, the joy of having stuff is relative, not absolute. If you're reading this, you probably have a phone and the means to occasionally buy nice clothing and a Barbie doll -- and you don't think much of it. But the key wasn't so much that Marzi's friend had all of these things, it was that she had them and the other kids at her school didn't. (I'm sure I don't have to provide you with any illustrations of how this applies to your own childhood, and possibly also adulthood.)

Marzi's friend's parents worked in the meat industry, hence had the opportunity to buy themselves as much meat as they wanted, including some to sell on the black market and/or sell preferentially in exchange for kickbacks. So they could shop in the one big store in their town that was always fully-stocked with anything you could want -- but where they only accepted payment in US dollars.

This is the part, naturally, that brings to mind a brilliant observation by Jared Diamond:
[T]he values to which people cling most stubbornly under inappropriate conditions are those values that were previously the source of their greatest triumphs.
This is one of the main reasons why -- for Americans -- the private sector is the only true sector, as I discussed earlier. It's why Americans today have a pathological fear of public sector providing any kind of goods or services.

A related story was featured in the book The Collapse of Belief, which I reviewed at Main Street Plaza:
Years ago, during the Soviet reign in Eastern Europe, a visiting diplomat from that region had his belief in the superiority of communism collapse when he first entered an American supermarket. He thought the store was fake at first. "If it were real," he said, "there would be long lines of people to buy all that food." But when he instructed his driver to take him across town to another store not on the planned route, he saw the same thing, and his conviction cracked.
It's a neat tale of how new evidence can help you think outside of the box, which is the point of the whole book. Yet, ironically, (though the book is good overall) this particular story pats its American audience on the back for thinking squarely inside the American box. America has giant stores chock-full of any goods you could possibly want -- always plentiful and inexpensive! That's what makes America great!! That's why we won the Cold War! Boo-yeah, go team!!

The tales of lines and shortages under a centrally-run economy are, of course, true. But look where clinging stubbornly to this triumph has led us.

Yes, America is the land where you can buy anything you could possibly imagine at any time of day or night. Consumer spending is practically the measure of the strength of the economy. If we're surrounded by crumbling public infrastructure, the electrical grid, rail network, and waterworks have had no improvements beyond emergency patching for thirty years, aging bridges are in danger of collapsing, the young population continues to slip behind in terms of the getting the education necessary to contribute to current and future technology, etc., at least we can always go to Target.

It's part of the reason why reasonable health care reform is such a battle in the United States. People can invent stories of waiting in long lines for a tiny ration of health care under "socialized medicine" and Americans are primed to believe them. It doesn't matter that it's as simple as in the tale of the diplomat above to step outside the US and see that the stories aren't true. It doesn't matter that such tales don't even make sense when you think about them for two minutes, or that US healthcare is among the most expensive in the world, by a lot, for the same treatments, or that the closest thing I've seen to the "waiting in long lines for a pitiful scrap of health care" is the model where people hold out until their problem is an emergency, and then go wait in line to have it treated at the emergency room because they don't have any health insurance. Communism made Marzi's family have to wait in a long line to get a few sausages -- while their American counterparts had as many sausages as they wanted -- so why should "socialized medicine" be any different?

Why, indeed...?

Maybe it's difficult to keep past triumphs in their proper perspective when planning for the future.

See also Rethinking economics 1: the private sector is the only true sector and Rethinking Economics 2: Lessons from Switzerland!!.


Bill said...

Excellent post! Clearly soviet communism was a very bad system. Logically that would only make American capitalism good if it is the only alternative, which it isn't. To me, the main problem with both systems is excessive concentration of control, and the abuse and oppression of individuals that follows. My greatest fear in any possible system is not standing in lines, but loss of freedom of expression. The last thing that I am willing to sacrifice is the ability to express public criticism.

C. L. Hanson said...

Hey Dad!!!

Exactly. If you look at the Soviet system, the problem wasn't simply that people weren't free to start a business. There was all sorts of repression of freedom of expression. Having the central government not only govern but directly manage the creation of all goods and services produced by the society represents far too much centralization of power, and contributed to general repression.

And if you oversimplify (assuming, for example, that the only possible alternative is American capitalism exactly as it is) you'll be led to wrong conclusions.

Unknown said...

I think the thing to keep in mind is that "American capitalism" is alive and well and functioning fairly properly in almost every area of the US economy - except health care/health insurance. Government intervention has distorted the market in health care/insurance so badly that there is no transparent price discovery mechanism, and there are so many government price controls (via Medicaid and Medicare) and so many government rules limiting markets (not being able to buy insurance across state lines, not letting doctors practice across state lines, using "certificate of need" rules to limit the amount of certain services - like MRI and CAT scan machines - in certain areas, etc, etc), and our tax code encourages so much third party payment, that there is no substantive competition and it's become a disaster. In a truly FREE MARKET, where capitalists are FREE to compete to offer goods and services to customers at whatever price the customers are willing to pay, we see, every year, prices go down, and quality and variety of choices goes up. Every year, cellphones get better and cheaper and there are more to choose from, while, every year, the massively regulated health care industry gets more expensive and more complicated and we come closer and closer to a system where small businesses get driven out and there are only a very small number of gigantic, government-sponsored health insurance companies left. THAT is what the Soviet Union really was all about: crony capitalism. A few giant, government sponsored corporations that were unresponsive to their customers. So yes, American capitalism is great and works very well, but our health care system is NOT American capitalism - it's much closer to the Soviet model.

C. L. Hanson said...

Hey Chris!!!

You have a point that a lot of the inefficiency in the US health care system is probably due to poorly-designed regulations.

Now, where is the logical place to go from this insight?

I would compare to examples of other health care systems in the world. US health care is dramatically more inefficient (in terms of the cost for the same care) than other first-world nations, almost all of which have some sort of national health care system that ensures that everyone has some basic coverage. OTOH, there is not a single example of a country where health care is totally unregulated and works great.

This ties in directly with what I said in the first post in this series:

I would like to make the radical suggestion that while it's possible for government regulations to be done badly (causing inefficiency), it's also possible for government regulations to be done well -- achieving desirable goals for your society.

I saw an interesting illustration of this idea in a recent article in Bloomberg Businessweek. ... the thing that struck me in the article was that in the US, government regulations are/were preventing people who want solar energy from installing it, whereas government regulations in Germany were instrumental in building a huge (largely private) investment in a solar network that is cost-effective, despite Germany not being a particularly sunny country. And the US public utility companies looking out for their short-term profits were a large part of the problem, so privatizing (a popular solution to government inefficiency) would do the opposite of helping. It's time to expect government competence instead.