Foreign interpreters hurt in battle find U.S. insurance benefits wanting

Los Angeles Times article "Foreign interpreters hurt in battle find U.S. insurance benefits wanting" (December 18th, 2009) provides an interesting observation without explanation. Specifically, Iraqi interpreters, injured in Iraq while running the same risks as American soldiers there, are not given the same benefits.

Payments intended to provide a decent standard of living in Iraq or Afghanistan leave the recipients below the poverty level in this country.

and

'When we were in Iraq, we were exactly like the soldiers,' Hadi said. 'Why are we treated differently now?'

After establishing that Iraqi interpreters are paid less, the article deepens the question. A normal, reflex response might be to say that Iraqi interpreters were paid less because they were worth less. After all, in competitive markets, people are paid at least what their second-best-offer is. The article gives evidence that interpreters were worth just as much, in terms of productivity, as U.S. soldiers on the ground.

Retired U.S. Army Col. Joel Armstrong, who served in Iraq and was a leading proponent of the 2007 troop buildup, or 'surge,' that helped reduce violence in the country, said Iraqi interpreters were crucial to the strategy's success.

'Without them, you really can't operate effectively as a force. It's just impossible,' Armstrong said.

Taking the Times at its word, the lapidary answer to Corrections is that when it comes to interpreters of Iraqi Arabic living in Iraq, the U.S. Army is all but a monopsony, a single consumer of a good for which there are many producers. In that vein, Iraqi interpreters will not be given their marginal product of labor, while U.S. soldiers, for which the U.S. Army is not the sole option, shall.

We note that even though contractors hire interpreters, we view them simply as intermediaries, and the article's concern about AIG disputing insurance payments will be reflected in higher ex ante wages rather than ex post coverage. This is true especially if private insurance can be purchased, while risk aversion makes the system less efficient.