February 27, 2017

Healthcare

Health and Wealth: The Downside of Plenty

February 27, 2017

Healthcare

One would hope that beneath all the noise emanating from Washington DC, serious policy discussions were actually taking place. Prominent among these should healthcare. The relative value of the Affordable Care Act or any potential alternatives aside, an oft-overlooked aspect of national health is the impact of lifestyle factors that greatly impact health outcomes in the long run.

Even the most lightly informed individual can be trusted to know that America has one of the highest obesity rates in the world and is the worst in this regard among developed Western nations. Sure, Michelle Obama advocated for healthy diets in schools, but the impact of such advocacy hardly entered into policy discussions on healthcare. While healthcare spending in the US is the highest in the world, a cursory look at measures of outcomes leaves observers underwhelmed. A pair of lengthy posts at Random Critical Analysis get at why this connection between high healthcare expenditures and middling outcomes in the US misses the mark in some critical ways. First, "exceptionally high health care expenditures are well explained by [America's] unusually high material standard of living."¹ Secondly, "gaps in health outcomes are quite well explained by behaviors (or at least indicators there of) related to diet and lifestyle." These reasoning behind these points are put forward in great detail and backed up with data in the posts. Without delving into the rabbit hole of individual points brought up therein, a key takeaway is that wealth and a high standard of living can lead to some negative trends in national health.

Looking beyond the US and other wealthy nations, a case study demonstrating this negative relationship between wealth and health comes from a favorite country of mine, Cuba. With the fall of communism in Russia, Cuba faced severe shocks through the 1990s as the largesse of its greatest benefactor disappeared. The shortages of food and fuel during the "Special Period" wreaked havoc on the Cuban economy and disrupted the patterns of daily life. Buses no longer operated and Cuban farms could not support the population. The consequences of this for the average citizen were smaller portions, more walking, and a greater proportion of food supplied by local farmers.² Nationally, this meant that public health improved with regards to several measures.

A study published in the BMJ found that the average Cuban lost 12 pounds of weight in the early years of the Special Period, diabetes prevalance fell 53% between a peak in 1986 and 1997, coronary heart disease mortality rates fell 34.4% between 1996 and 2002, among many other markers of health. Not all the health impacts were beneficial during this crisis. The death rate for the elderly increased 20% between 1982 and 1993. The Special Period was an incredibly trying time for the Cuban people as all aspects of life were disrupted.

That weight loss occurs as a result smaller portions and more walking is not surprising. That diabetes and heart disease rates fall following weight loss is also unsurprising. What is surprising is that these would occur sharply on a national level. When the trend globally has been just the opposite.

The Special Period did come to an end in the second half of the 1990s. As economic normalcy returned, so did the aforementioned health measures begin to rise once again. Physical activity levels have tapered off as vehicles have returned to the roads, food intake returned to pre-crisis levels by 2002, and obesity rates have shot up. Diabetes measures have returned to or surpassed levels prior to the crisis, though heart disease mortality has stayed low.

This all is not to celebrate the glories of failed economic systems. Instead, it ought to display the complexity of healthcare and the difficulty of tackling public health issues. A country getting wealthier is objectively a good thing, but that wealth can come at a cost. Peculiar beneficial effects can be found in otherwise disastrous circumstances. Most Cubans would probably accept the tradeoff of higher obesity and diabetes rates for buses that run and reliable access to food. As debates in Washington go on about the merits and faults of single payer, insurance mandates, pre-existing condition coverage, and the litany, perhaps more heed should be given to examining how to decouple growing wealth from growing waistbands.

¹ One of the arguments presented is that the relationship to be examined should not be healthcare expenditures and per capita GDP, but rather healthcare expenditures and Actual Individual Consumption (AIC). AIC takes into account goods and services purchased by households in addition to services provided by non-profit institutions and governments. In this sense, it is a better reflection of standards of living and in this regard the US leads other countries. Further, the relatonship between healthcare spending and AIC is best modeled non-linearly. In this the US is no longer that outlier it appears to be when a simple linear analysis of GDP vs spending is conducted. As a country's standard of living increases over time, its healthcare spending and outcomes often look more like the US.

² The Special Period also demonstrated the ingenuity of responses to a crisis. Bizarre looking camello trailer buses were a much-maligned Havana staple for more than a decade. Organopónicos, public urban organic farms, are still commonplace today.

Ben Nussbaumer

February 26, 2017

Economics

The Need for a Basket of Dismals in the White House

Ben Nussbaumer

February 26, 2017

Economics

In light of the expected naming of Kevin Hassett to head the White House Council of Economic Advisers, it is important to remember the value of economists (and other eggheads more broadly) in policy discussions. During the 2016 campaign and his subsequent administration, Donald Trump has been consistently insulated from serious academic economists in a way that stands out from past candidates and presidents.

Ben Nussbaumer

February 26, 2016

Reading

Reading Links

Ben Nussbaumer

February 26, 2016

Reading

2/26

Albania's Communist Period: The Past and Its Legacy

Ben Nussbaumer

August 13, 2015

Travel

8/2

It’s possible, likely even, that my first exposure to Albania came from reruns of The Simpsons. It might sound a little ridiculous, but it’s not like Albania is a topic that comes up much in elementary school. The Simpsons, however, were a staple of my youth and an education itself. The basic plot of “The Crepes of Wrath”, an episode from the first season,” is that Bart is sent away to study abroad in France after proving too much for everyone to handle. The Simpsons family receives an exchange student of their own, Adil from Albania. While Bart is working as slave for two horrible Frenchmen at their winery, Adil is the perfect child that Bart could never be. Adil’s perfection is facade, as he is actually a spy for the communist Albanian government. He is caught by the FBI sending plans for the nuclear plant back to Albania and sent away. I don’t know when I first saw this episode, though I do remember it well, mostly for Bart’s struggles in France. By the time I would have first seen it, Albania was no longer communist and things would have been dated. I wouldn’t have cared, the references would have gone over my head anyway. At least I learned that Albania was a place and I got a half hour of entertainment.

From 1945 to 1992 Albania was a communist state. For the first 40 of those years the country was run by Enver Hoxha. Even by the standards of communist states, Albania was isolated.

If you’ve seen the Spike Lee joint Inside Man, then you’ve heard Enver Hoxha’s voice. A recording of him is a plot device. If you haven’t seen the movie and don’t know what I’m talking about, go out and watch it. Anyway, Hoxha’s voice and likeness blanketed Albania during his rule and he had total control of the country.

Hoxha, like most communist dictators, is an intriguing figure. He was born in Gjirokastër in 1908 in the house that now holds the Museum of Ethnography. He later went to France for university on a scholarship. Like Ho Chi Minh, Pol Pot, and many other communist leaders, Hoxha’s time in France proved to be a political education and he became involved in communist activity.

Birthplace of Enver Hoxha (now the Museum of Ethnography)

He returned to Albania and played a role in the founding of the Albanian Communist Party in 1941. While Albania was occupied by Italian and German forces during the war, Hoxha was a leader of partisan forces. By the war’s end the communists were the dominant political force in the country and Hoxha, as their leader, naturally came to lead post-war Albania.

He put the country on a strongly Marxist-Leninist path. Confiscating land, implementing massive health and education programs, and silencing dissent. Hoxha had a close relationship with Stalin and the USSR. Once Stalin died and the USSR shifted course, Hoxha held steady to a Stalinist ideology and split from the Soviets. He looked to Maoist China for guidance and put in place typically disastrous policies. The isolation from Russia meant that its primary outlet for goods was no longer an option. Combine this with the already asinine economic policies of communism and it makes for struggle. When Mao died in 1976 and China began to reform Albania was left isolated.

Hoxhaist Albania was marked by hardline economic and social policies. Religion was banned. The possession of religious symbols, such a cross, was enough to warrant a visit from the authorities. Churches, mosques, and other religious buildings were destroyed. Gjirokastër provides one example of this. Over a dozen mosques existed in the city prior to Hoxha’s rule. All but one of them were destroyed during the communist period. The one that was allowed to remain standing was utilized as a training center for circus acrobats because of its high roof. Today the building is still standing and back to serving its original religious purpose. The Albanian population never quite returned to practicing their religions as before. Albanian society remains quite secular.

Gjirokastër houses several other physical reminders of the communist regime. Under the government’s industrialization plan Gjirokastër was the site of several factories. The primary factory produced metal goods such as tableware and cigarette cases. Leftover sheet metal from the factory can be spotted across the city being utilized as fencing, the obvious outline of forks, knives, and other items stamped from the metal clearly visible.

The Hoxha regime was extremely paranoid about the threat of foreign invasion and had over 700,000 bunkers constructed across the country. I saw a few of these while walking around the valley near Gjirokastër. Though many are crumbling, I stumbled on one that had a new life as a garden shed.

A typical bunker near Gjirokastër — A typical bunker near Gjirokastër

A beat-to-hell American plane is on display in one corner of Gjirokastër Castle. It’s a bizarre because it feels like it was only placed there as an afterthought. There does not seem to be any compelling reason for the plane to be in its particular location. However, it has an interesting history behind it that goes to show the regime’s paranoia. In 1957 the Italy-based plane was flying in the area when it developed mechanical problems and made an emergency landing in Tirana. The Albanian government claimed that the plane was spying on Albania and this was used as proof of the outside threat to the country. What the plane was actually doing is unclear, though the spying claim seems more an invention of the Albanian government than one based on fact. Even the sign at the museum references this ambiguity- “American Spy Plane(?)”.

The alleged spy plane of Gjirokastër Castle — The alleged spy plane of Gjirokastër Castle

Tirana, then as now, was the capital of Albania and the center of political life. Hoxha and the communist elite lived in a portion of the city known as Blloku (the Block) that was off limits to the general population. It is a trendy neighborhood these days, but still holds reminders of the regime. Hoxha’s residence can be seen, but not visited. From the outside it appears to be of a smaller scale than might be expected of a man who ruled the country for 40 years. By Albanian standards it must have been highly luxurious, but by dictator standards it seems fairly modest.

The back side of Enver Hoxha's residence

The Checkpoint Memorial to Communist Isolation can be found in a park in Blloku. A bunker, a section of the Berlin Wall, and concrete supports from the mine of a forced labor camp remind passersby of some of the consequences of authoritarian communist rule.

Skanderbeg Square, the center of the city, used to be the location of several communist statues. Lenin, Stalin, and ,of course, Hoxha held places of honor here. In fact, the statue of Stalin remained until 1990. It was, perhaps, the last public Stalin statue located outside of Stalin’s hometown of Gori, Georgia. The statue of Hoxha was toppled by a mass of citizens in early 1991. It was a major moment indicating the coming end of Albanian communism. Statues of Lenin and Stalin are hidden behind the National Gallery of Art and I was able to look at them up close. They have certainly seen better days.

One of Tirana’s architectural landmarks is the Pyramid. This monstrosity is a few blocks from Hoxha’s residence. Designed Hoxha’s daughter and son-in-law, it was built after the dictator’s death to house the Museum of Enver Hoxha. It didn’t serve long in this capacity. With the fall of communism it was converted into a conference center, but that concept was later abandoned. Its only occupant is a television station in the basement. It sits covered in graffiti, windows smashed, stripped of anything of value on its exterior. A physical representation of the legacy of a man and philosophy that kept the country isolated and impoverished for so long.

The transition to democracy and markets was bumpy for Albania. The communist party effectively surrendered control of the political system in 1990 by announcing that free elections would be held in 1991. The Communist Party was flogged in these elections and ones that followed in 1992. It might appear that people do not like living under repressive regimes which deny them basic liberties and keep them poor.

The economy moved to a market system and, for the most part, was successful in early period of liberalization. However, in one of the most episodes in any post-communist transition, a majority of Albanians fell victim to pyramid schemes which wiped out their savings and devastated the economy in 1997. The government did very little to control these schemes even after becoming aware of their existence. The country descended into chaos once the schemes collapsed. The prime minister resigned and a new government was eventually elected, however during this time over 2,000 Albanians died violently. The economy normalized once order was restored and growth returned.

As I write this, Albania is a functional democracy. It feels like Albania has escaped the shadow of its communist past and put the turbulence of 1997 behind it. Reminders of 47 years of communist rule remain, but they don’t dictate the country’s present state, instead serving as reminders of how not to do things. My brief exposure to the country has been positive and it makes me feel optimistic about its trajectory. I know I will be keeping any eye for out Albania in the news in the future.

Links Worth Clicking On:

IMF article on the pyramid schemes
A great primer on what they were, why they appeared, and how they grew. A little wonky, but nothing beyond some standard economic concepts.

Contemporary article on the 1997 unrest (NY Times)

Photos from inside the Pyramid

Ben Nussbaumer

August 7, 2015

Reading

Greece Reading

Ben Nussbaumer

August 7, 2015

Reading

Links to more reading related to yesterday's post

On the economic crisis

Collection of coverage from The Economist on the crisis

The effect on US importers of Greek goods (NY Times)
Enjoy Greek wine or olive oil? You may have a harder time getting those and other Hellenic goods as Greek exporters struggle to import inputs, such as bottles from Italy.

Poorer European countries are not happy about paying to bail out Greece (Guardian)

On refugees

How they're getting to Greece and where they're headed (Economist)

Ben Nussbaumer

August 6, 2015

Economics, Travel

Greekonomics

Ben Nussbaumer

August 6, 2015

Economics, Travel

7/29

Two and a half millennia ago Greece was the Western world. Today it is the center of attention once again, but for reasons that will not be a source of pride for generations to come. While Europe broadly faced a financial storm in recent years, Greece has faced a hurricane. Turn on the news or open the newspaper and any report from Greece is likely to be bleak. Years of poor policy have come to a head. In this post I’ll give a rough overview of the situation and my observations from my brief time in Greece. You can skip over the wonky stuff as you like, it’s nothing new or groundbreaking. I just wanted an excuse to write about economics.

Greece’s Situation

GDP per Capita (PPP) of Greece, the eurozone, and the US between 2007 and 2014

When Greece joined the then-European Community (now European Union) it was the poorest member state. Though it developed in the following decades, it remains poor compared to its EU brethren.

The creation of the euro was supposed to impart some fiscal discipline to member governments by forcing them to abide by certain limits on deficits and debt. Certain preconditions had to be met before joining the currency union. At the time of the euro’s creation Greece appeared to meet these requirements. Now it is clear that they were not prepared and that much of the economic data gathered by the Greek government was inaccurate.

Currency union brought a huge inflow of foreign capital to Greece. With foreign money coming into the country, the government could maintain high levels of spending. Foreign capital flows shut off once the global recession hit, meaning that the government could no longer finance such large deficits.

Greece's unemployment rate skyrocketed, productivity declined, and a vicious economic cycle began.

Assuming Greece would have been hit by a financial crisis no matter what, their monetary policy options differ depending on whether they have their own currency, the drachma, or the euro. With the euro their options are extremely limited. The European Central Bank (ECB) sets policy and does so based on the needs and desires of the whole eurozone. Germany, having the biggest economy in Europe as well as having had the central bank with best reputation for fighting off inflation, holds the most power within the ECB. With the German economy performing relatively well and Germany being the primary creditor to Greece, the ECB’s policy motivations are not necessarily in line with those of Greece. Thus, Greece has very little ability to address its problems through monetary policy as a eurozone member.

In an alternate universe where Greece faced this economic crisis under the drachma a set of tools would have been available to address this. The central bank could unilaterally devalue their currency. Making the drachma weaker against foreign currencies would have the benefit of making Greek goods cheaper for foreign buyers. Greek exports would rise and a current account surplus would help to finance the government debt.

Between 2010 and 2014 Greece received two bailout packages from the ECB, European Commission, and International Monetary Fund, together known as the Troika, totalling 240 billion euros. These bailout packages had several conditions attached to them aimed at addressing the structural problems in Greece’s economy. Austerity measures were predictably unpopular with the Greek populace.

After several political and economic developments It became clear earlier this year that Greece would still be unable to make their debt obligations and some sort solution had to be reached in order to avoid default. The Troika proposed a third bailout package and further austerity.

On July 5 a referendum was held in Greece on whether or not to accept the proposed bailout package. Greeks had to choose two scenarios, neither of which was pleasant. By voting “Yes” they would accept the proposal of the Troika, avoid default, stay in the eurozone, and accept more cuts to services. Voting “No” meant rejecting austerity, but accepting uncertainty of the next step. Supporters of the referendum posed it as a question of whether or not to remain in the EU and eurozone, both of which the majority of Greeks support. For many, a “No” vote was seen as an effort to retain national pride, or at least a way to say “Fuck you” to the creditors and austerity. The referendum was defeated handily 61 percent to 39 percent.

As convoluted as this summary may be, it’s still extremely simplified. Greece has been in a turbulent situation for years now. If I included every detail I’d never have time to write anything else.

Regardless of the specific path Greece follows from here, the economic situation is rough. Over one quarter of the labor force is unemployed. Production is still way down. National debt is still incredibly high. There is no clear path forward. The Greek political situation is messy as the far left Syriza party controls the government and they have demonstrated a failure to effectively grasp either economics or politics. A week after the referendum the Syriza government accepted a new bailout package with even steeper cuts to pensions and higher taxes than the one rejected by the referendum. It appears with this third bailout that threat of Grexit has been put off for now. Greece still needs a lot of help. Much of this is their own fault. However, creditors should recognize that a significant restructuring of Greek debt is likely in everyone’s interests. If properly handled, the consistent uncertainty and chaos that has become the norm with Greece and has infected Europe can be mitigated in large part.

The Unseen

I won’t pretend that I truly understand the sentiment of the people in Greece or even all of the economic and policy factors at play. I caught a glimpse of Greece as it faces several challenges. I can only describe what I saw and what interpreted. For all I know, I could way off target on some of my judgments.

On Kalymnos the effects economic crisis aren’t immediately obvious. I have no reference point to work from, but my immediate sense was that tourism was slow compared to years ago when the economy was functioning. This was confirmed when I talked locals at stores and restaurants.

“You should have seen it seven or eight years ago. There was nowhere to sit around here. So many people visiting. It’s bad now. Really bad compared to before.”

That’s what one restaurant employee told me as I ate breakfast near the ferry port. Restaurants line the waterfront in the area, but none of them was near being packed. This was true just about anywhere. Sure, some restaurants got fairly busy in the evenings, but there were more near empty ones than I could count. The pain of the economic crisis was not immediately obvious on Kalymnos. No doubt that business owners feel it, but it’s much harder for the tourist to see the problems.

The Seen

The economic issues are visible in Athens. The guidebook calls the city “edgy”. I suppose that’s fair, but maybe a tad polite. There is graffiti everywhere. The locals say this is nothing new, the amount has just increased. The streets are dirty. Protests are a regular occurrence, though I wasn’t witness to any. The police presence is quite high. Like many things, I don’t know if this is normal or they’re expecting more activity with the recent bailout talks.

A common spray paint tag across the city is “ΟΧΙ”. “No”. No to the referendum. No to austerity. No to creditors. Three letters to be found just about anywhere.

The anarchist circle-A is another symbol peppered everywhere. Not surprising in a city covered in spray paint.

"I am an anarchist, don't know what I want, but I know how to get it"

Posters from the KKE, the Communist Party, has posters across the city. Once outlawed under the military junta, the KKE has become the fifth most popular party in Greece. Posters for an event in May celebrating 70 years since the defeat of Nazi Germany still remain posted. It’s easy to see them drawing new meaning following the defeat of the referendum. Another defeat of the Germans by Reds. I don’t know if the KKE sees it this way, but if were them I’d be running with this concept. The left has been quick to bring up creditor Germany’s Nazi history.

In a case of another political philosophy being pulled from the rotting garbage dump of history, Golden Dawn, modern fascists and antagonists to the KKE are the third most popular political party in Greece. Their presence is less prominent in the streets of Athens. However, reactions to them are everywhere. Anti-fascist and anti-Nazi symbolism is easy to find. Once again communists and fascists are having at it.

There are lots of people to be seen during the day in Athens not engaged in any productive capacity. It’s hard for me to say what portion of these people are unemployed and what portion are simply taking a break. I’m curious, but enough to go around asking random people on the street their employment status so I can post about it on my blog.

There are obvious homeless on the streets. It’s not a shock. Any large city in America has this problem. Like a lot things, locals just say it existed before and has just gotten worse with the crisis. Homelessness has exploded in Athens lately and created more issues for the system to handle.

Another Crisis

Coming to and from Kalymnos I had a few hours in Kos as I waited to change ferries. Kos is quite a bit larger than Kalymnos and more heavily trafficked. There are a few signs of the economic situation, but another crisis is what grabs attention on Kos.

While Greece has been weathering their economic crisis an overflow of migrants has simultaneously appeared. They come from Syria, Iraq, Libya, and beyond. Greece has become the top destination in Europe for refugees.

Groups of these immigrants gather near the ferry port in Kos. Having escaped physical dangers in their homelands they still face incredible insecurity in their new locales. Greece does not know how to handle the influx of people. Even if it did, there remains the issue of them having the means to handle it. Their presence is very visible. Walking to Nerantzia Castle, built by the Knights Hospitaller to protect Kos from outsiders, the refugees line the street and park. There is the unmistakable smell of human shit in the shadow of the tree beneath which Hippocrates once taught medicine. There is no ignoring it. These people do not choose to come to Greece like I do, at leisure and with little concern. They come from some of the most horrific conditions currently found on earth.

The problem is long term one too. So much of Aleppo, where the Silk Road ended, has been turned to dust. Why return home when there is nothing to return to?

Greece is not alone in facing this. For most, Greece is only a transit. A pit stop before Germany or elsewhere. Italy too has been overwhelmed with people coming from the sea.

I do not have solutions to this refugee problems. Not now. Not yet. Maybe not ever. At least I can say I observed it and in some small measure documented it.

On the Way Forward

Greeks seem to have mixed feelings about the future. The near- and medium- terms are going to be painful. How painful is anyone’s guess. Still, the long-term leaves room for optimism. A shop owner on Kalymnos insisted to me that what Greece was facing wasn’t even really a crisis. Greece had faced those before. Greece was dealing with “problems”. Nevertheless, he was insistent that the Greek spirit would overcome the problems and the economy would be prosperous once again. It’s tough to have the kind of optimism he had, but it might have worked to convince that Greece will survive and thrive again. It’s going to be a while, but for their sake, I hope the Greek spirit does triumph.