on 15 July 2013
This book contains very interesting and meaningful statistics and the authors have certainly it a lot of time and energy into the various research studies. For me, the book had a few too many statistics and studies stuffed in there which made for difficult reading but the points raised are real eye openers which policy makers could stand to learn from.
on 4 April 2014
‘The Body Economic: Why Austerity Kills’ is a powerful and persuasive critique of governmental attempts to curb fiscal expenditure in an attempt to enhance economic growth and reduce public debt. The book’s central aim is to shed greater light on the human and health costs of austerity politics and economics. The authors argue that healthcare spending, when carried out productively and wisely, can strengthen national economies and heighten national well-being. Countenancing their arguments and undergirding their thesis is an impressive and meticulous body of research which establishes, quite conclusively, that the higher the dose in which austerity was administered in a country, the more people died or deteriorated health-wise. Relying on their findings, Stuckler and Basu point out that countries, which have suffered recessions but yet have continued to maintain governmental spending on health care have managed to avoid deterioration in their citizens’ well-being. Notwithstanding the frequent recourse to statistics in the book, the authors have managed to produce, to their credit, an eminently readable book that is rich in analysis and insight but thankfully un-polemical in its tenor.
on 28 May 2013
Stuckler and Basu are preeminent epidemiologists who have conducted some of the most important analyses of the affects of recession-era economic policies on health outcomes, with papers regularly appearing in prestigious peer-reviewed medical journals such as The Lancet, PLoS Medicine, and British Medical Journal. I have glanced through many of their papers, and decided to read this book to get a better sense of the broader historical and political context of these studies. Nevertheless, I went into the book still somewhat expecting them to build chapters around their major papers (as many books do) which often leads to a contrived or disruptive narrative, as the authors try to force a thread through disparate works. This was fortunately not the case here. Instead, the book is divided into three sections, the first of which looks at historical economic events (The Great Depression, the transition of former Soviet states, the East Asian economic crisis), the second examining the recent great recession (focusing on contrasting experiences of Iceland and Greece), and the third looking at the contemporary austerity debates and experiences (with focus largely on the US and UK, though bringing in evidence from Sweden, Spain, Italy, etc.)
The writing is clear and engaging. The authors provide a concise, yet informative review of the economic debates that surrounded the response to the Great Depression, "Shock Therapy" for the Former Soviet States, Iceland's economic collapse, Malaysia's defiance of the IMF and therefore of the health consequences of the East Asian economic crisis, the political events and health effects surrounding Greece's recent bailout and austerity push, etc. They've done a great job of balancing historical/political contextual information with explaining what they found in the data and building an argument for how this should inform future policies. What's left out to keep the text tight and readable is well referenced in endnotes.
One of the most compelling points in the book surrounds the discussion of the "fiscal multiplier", which as the authors define is "an estimate of how many dollars of future economic growth are created for each dollar of government spending". Austerity is based on the principle that this number is less than 1, such that government spending is hurting economic growth potential (and by extension, cutting spending would allow diversion of this funding towards activities that create more growth). Stuckler and Basu note that the IMF assumed in many cases that this number was 0.5, such that austerity makes economic sense, whereas data later suggested that it was well over 1 in many scenarios, particularly for health spending where it was as high as 3.0. In other words, cutting spending on healthcare wasn't just bad for health, it hurt GDP growth potential. This is a critical concept, and my one criticism of the book is that there wasn't more discussion of where the IMF drew this number from and why they continued to use this value after it has been refuted in multiple examples (as the authors illustrate).
That said, the fiscal multiplier is really about the anticipated economic consequences of austerity, whereas Stuckler and Basu's main thesis is that these debates about austerity have universally failed to keep public health concerns at the forefront, and those health consequences are considerable. The key myth that is likely keeping public health concerns sidelined in the discourse about austerity is that health outcomes always decline in a recession, so the focus of fiscal policies needs to be solely on economic growth to address that. The authors demonstrate with great clarity that health outcomes in many cases improve during recessions or depressions (mortality fell during the Great Depression and rose during recovery!); the important variable is how governments manage their health and social safety nets during periods of recession and unemployment. Austerity hasn't been shown to make good long-term economic sense (with a trend towards harm), whereas it invariably has short term public health harms.
Their fundamental argument then is a simple but urgent one for countries facing difficult fiscal decisions in the face of recession: that the predictable health consequences of spending cuts be weighed in the calculus of austerity, because the lives lost during recession won't return with the GDP.
on 29 May 2013
Saving money in times of scarcity is a theme passed along to most of us from our parents and grandparents. Many of us deeply value and respect individual frugality, even if it is not easily or effectively put into practice. Indeed, spending and saving wisely is a key foundation for individual and community prosperity. Somewhere along the way, however, large number of influential economists and politicians intuitively and understandably tried to apply this logic to governments at times of financial crisis. Thus was born the idea of "austerity", a fiscal principal of cutting back spending in order to avoid debt and deficits. The results over the last quarter century of global austerity policies were devastating on both economic growth and population health. The austerity policy "experiment", as epidemiologists David Stuckler and Sanjay Basu describe in their new book, The Body Economic, has led to large losses to both the economy and to population health.
As an epidemiologist and a physician myself, I see on a daily basis the real and deep morality to statistics and their accurate collection, interpretation, and discussion. Real people live and die on the basis of how we as citizens, policy makers, and clinical providers process data. Indeed, all of us, regardless of our professions, are confronted with statistics about life and death on a daily basis. What we or our policy makers rarely do, however, is analyze deeply these statistics and how they actually impact our lives. This is the heart of the approach that Drs. Stuckler and Basu take to analyzing economic policies at times of recessions: what do data tell us, beyond rhetoric and intuition and biases, about how governments should respond? Interestingly, the answer to recessions is to focus less on deficits and make key infrastructure, public health, and employment investments.
Drs. Stuckler and Basu take a rigorous, insightful, and approachable look at the mountains of data that have accumulated as a result of the large-scale austerity experiment. Building off a growing academic literature, they build a strong case for the subtitle of their book: that austerity both suppresses economic growth and decimates population health, that governments' must maintain a rate of growth below the rate of revenue growth. This may sound like a political statement, making a political argument about a type of fiscal policy. Indeed, their work has important policy implications. However, the work at its heart is a profoundly moral one: how do we learn from evidence about life-saving or life-shortening economic policies? Can we pursue policies that break our false dichotomies that government spending is not consistent with economic growth, or that public health investments, while they may have health benefits, might harm the economy? Their data show clearly that these dichotomies are political creations, not descriptions of economic truths.
One of the most notable of the austerity experiments occurred in former Soviet Union states after the fall of communism. While austerity was very much en vogue among economic advisors to post-communist states, there was wide variation in the degree to which countries pursued austerity. Across twenty-five post-communist countries between 1989 and 2002, those countries that implemented rapid mass privatization suffered increased male job losses by 56% compared with those that pursued a gradualist path (for example, Belarus, who kept poverty rates below 2% during the transition). Furthermore, countries like Kazakhstan, Latvia, and Lithuania that engaged in rapid austerity measures experienced significant drops in life expectancy over the course of five years, while gradualist neighboring countries fared much better in terms of public health outcomes. One of the more striking findings was that there 10 million excess deaths among Russian men attributed to austerity measures in the immediate post-Soviet era; much of that was related to joblessness. Drs. Basu and Stuckler make compelling arguments with data that the economic and health disasters after the fall of communism were not inevitable.
Similar findings are seen with the most recent economic recession. In discussing these cases, The Body Economic provides rich evidence that health, education and social protection programs have among the highest fiscal multipliers, or money received back in economic growth for each dollar invested. Austerity measures that cut such programs therefore have profound economic effects. The resulting health effects--both because of the lack of health programs and because of worsening economies--is felt in the loss of life. There were 35,000 avoidable deaths in the United States during the recent Great Recession due to a lack of healthcare insurance, with 6 million Americans joining the 40 million already without coverage during this time. During the Greek financial crisis in which austerity measures were pursued, there was a 40% rise in infant mortality and 47% rise in unmet healthcare needs between 2008 and 2011.
Their lessons are important for individuals across the political spectrum. They put forth evidence that economic growth and investing in a robust social safety net can be mutually reinforcing rather than, as many pundits would suggest, mutually exclusive. At a time of decreasing confidence in government around the world, their data speaks to the relevance of governments in protecting decency, health, dignity, and economic prosperity. The data implore citizens to hold their governments accountable to a robust social safety net and pro-growth strategies (including utilizing fiscal multipliers to evaluate impact and growth) during recessions while demanding of governments to be more effective in how they deliver on these policies. After all, these are not academic matters but rather questions of life and death, prosperity and poverty.
Duncan Maru, MD, PhD, is a physician, epidemiologist, and co-founder of Nyaya Health. He works as a resident physician in Internal Medicine and Pediatrics at Harvard where he is a fellow in the Global Health Equity Program.
on 5 September 2013
This book discusses the real cost of cuts; people getting stressed, ill , suicidal. It explains in an easily readable style why number crunchers and politicians should not be in charge of us. It also highlights some of the more shocking facts like paying a foreign company £400 million to save about £10 million.
It is a good book for anyone who only reads media headlines and thinks it is OK for politicians to make decisions based on what looks good rather than what is good for society.
on 12 June 2013
Much of what is written here hardly comes as a surprise really, but it's easy to see how anyone from the political right will hate the book's conclusions. How much longer can we go on believing that austerity is in the interests of everyone in the long run? A very interesting and revealing book!
on 6 June 2013
This book is essential reading for everyone who believes that the only way to approach the current recession is with austerity measures. The book shows how time and again every country who refused to introduce austerity measures and instead invested in social protection programmes are moving out of recession quicker, than those who did, while maintaining the health, education and every other social protection measure possible. This book should provide the blueprint / manifesto for all political parties that consider themselves Socialists and ably demonstrates why the IMF and its supporters have simply made the wrong decisions and are responsible for doing so much damage to the countries that have implemented their policies and are responsible for the deaths of so many people around the globe. I cannot stress that last point enough in my opinion the IMF is demonstrably responsible for the rising suicide rate in countries which have introduced austerity measures and should be held accountable for their actions.
on 7 August 2013
David Stuckler, a Senior Research Leader at Oxford University, and Sanjay Basu, an Assistant Professor of Medicine at Stanford University, have produced a superb book on the costs of living with capitalism. They point out that today's second great depression is `a full-scale assault on people's health'. They compare and contrast the health effects of different economic policies.
They write, "The results of our research demonstrate that stimulus spending on specific public health programs actually helps to reduce debt by sparking new economic growth. Every $1 invested in these programs returns $3 back in economic growth that can be used to pay off debt. By contrast, those countries participating in steep short-term cuts end up with long-term economic declines."
Spending cuts reduce demand, adding to unemployment and debt. Even the IMF now says that austerity slows down economies, worsens unemployment, and hampers investor confidence.
IMF economists had assumed, without evidence, that each dollar of government spending, on whatever sector, in whatever country, created only 50 cents in growth, so public spending would shrink the economy, and cutting spending (deficits) would boost growth. The authors, using data from more than ten years, from 27 countries, found that every dollar of government spending created $1.7 in growth. Housing, health and education spending each created more than $3. They remark, "In the long term, the products of investments in education and health services were smarter and healthier workforces."
But military spending and bank bailouts created less than $1. The authors comment, "Nor do banker bailouts tend to stimulate the economy, as funds are more likely to end up stashed in offshore bank accounts and less likely to get reinvested into providing jobs or technology."
When Iceland's crisis broke, the IMF called for half the country's income to be paid to private investors between 2016 and 2023, making Iceland's people pay for private banks' bad decisions. Instead, Iceland increased its social protection spending by 4 per cent of GDP between 2007 and 2009, and thus managed to improve its public health. In 2007 its public spending was 42.3 per cent of its GDP. This rose to 57.7 per cent in 2008 and has stayed about 10 percentage points higher than it was in 2007. But this has not led to the forecast disasters of inflation, runaway debt or foreign dependency.
In March 2010, 93 per cent of Iceland's people voted to invest in rebuilding the economy and against paying for the bankers' debts. In 2012 its economy grew by 3 per cent and unemployment fell below 5 per cent. Even the IMF admitted that Iceland had a `surprisingly' strong recovery. In October 2012, two-third of its people voted for a new constitution designed to give the people more control over their natural resources and to end the cronyism between the banks and the ruling class.
Since the crisis began, Greece has cut its health budget by 40 per cent: it has now suffered outbreaks of West Nile Virus, HIV and malaria, and rates of depression have risen sharply. Between 2008 and 2010, infant mortality rose by 40 per cent.
28 billion euros of bailouts did not stop government debt levels continuing to rise, reaching 160 per cent of GDP in 2012. The IMF and the European Central Bank were sending money straight through Greece and out to creditors in Britain, France, the USA and Germany, who had blown up Greece's disastrous bubble. As Stuckler and Basu comment, "Greece's bailout was using public funds not to help Greece but to rescue the poorly invested private money of the world's banking elite."
They point out, "Iceland - rocked by the worst bank crisis in history - didn't experience rising deaths in the Great Recession. It chose to uphold its social welfare programs, and went even further to bolster them. By contrast, Greece, Europe's guinea pig for austerity, was pressured to undertake draconian cuts - the largest seen in Europe since World War II. Its recession was smaller than Iceland's at first, but now has worsened with austerity. The human costs have become dramatically clear: a 52 percent rise in HIV, a doubling in suicide, rising homicides, and a return of malaria - all as critical health programs were cut."
Stuckler and Basu point out that "Social protection programs could save lives. When countries invested more than about $200 per capita in ALMP [Active Labour Market Programmes], the correlation of unemployment with suicides appeared to completely vanish. This was precisely why unemployment spikes had no correlation with increased suicides in Sweden, Finland, and Iceland, but unemployment was strongly correlated to suicide in Spain, the US, Greece, Italy and Russia. ... ALMPs helped people to return to work and, by keeping people economically active, reduced pressure on public welfare systems by increasing the economy's labor supply - a main engine of economic growth."
Before the restoration of capitalism in the former socialist countries, "social benefit programs contributed to a very high health/GDP ratio in Soviet countries. In general Soviet economies tended to have much higher life expectancies than capitalist economies at similar levels of GDP per capita (such as Chile, Turkey, Botswana, South Africa, etc.). On average, Soviet men had 4.8 years greater health and Soviet women had 7.7 years greater health for their country's level of income compared with capitalist economy averages."
Some former socialist countries, including Russia, Kazakhstan and the three Baltic States, adopted the US/EU demand of `shock therapy' (all shock, no therapy). Milton Friedman later admitted, "In the immediate aftermath of the fall of the Soviet Union, I kept being asked what the Russians should do. I said, `Privatize, privatize, privatize.' I was wrong. [Joseph Stiglitz] was right." The UN's investigative team warned then, "a human crisis of monumental proportions is emerging in the former Soviet Union, as the transition years have literally been lethal for a great many people." Russia's vice president Alexander Rutskoy denounced Yeltsin's programme as `economic genocide'. The authors estimate that there were 10 million excess deaths in Russia in the early 1990s. The health of Russian men is still worse than it was before reforms began in 1991. Overall life expectancy for Russian men and women was sixty-eight years in 1991; in 2012 it was sixty-six years. Russia, Kazakhstan and the three Baltic States also had bigger economic declines and slower recoveries.
By contrast, Belarus did not enforce the IMF policies, so it kept poverty rates below 2 per cent; unemployment was never more than 4 per cent, and is now 1 per cent. So it had a far better health outcome.
In 1997 the East Asian bubble burst. The IMF cut food subsidies and raised by 25 per cent the tax on kerosene, Indonesian people's main cooking fuel. The IMF considers health care a `luxury good' so on its advice, Thailand cut its health spending by 15 per cent in 1998 and Indonesia cut its by 25 percent in 1996-2000. The IMF had forecast that its measures would grow Indonesia's economy by 3 per cent; it shrank by 13 per cent. South Korean people called the IMF the `Infant Mortality Fund', because infant mortality rose with the IMF's programme. There was an 8 per cent rise in death rates.
Stuckler and Basu observe, "Those countries that cut social protection programs had greater rises in poverty. Gross domestic product in 1998 fell by a dramatic 30 percent in South Korea, 27 percent in Thailand, 56 percent in Indonesia, and 34 percent in Malaysia. But these economic shocks tipped more people into poverty in South Korea, which had weaker social protection systems and also had implemented the harshest austerity. In 1997-1998, poverty in South Korea doubled from 11 percent in 1997 to 23 percent in 1998. Indonesia and Thailand also experienced significant increases. ... Without a strong safety net, rising poverty and escalating food prices led to mass hunger in Thailand and Indonesia."
By contrast, "Malaysia took a dramatically different approach, and reined in rising food prices. In 1997 Prime Minister Mahathir claimed that the source of the currency crisis was `currency trading', which he called `unnecessary, unproductive and immoral'. It should be stopped and made illegal, he said. Malaysia introduced controls on market speculation and fixed its exchange rate to the dollar. As a result, speculative investors had difficulty betting on the rises and falls of Malaysia's currency. In addition, Malaysia expanded its food support programs for impoverished citizens. Unlike Indonesia and Thailand, Malaysia experienced no significant rise in malnutrition among mothers."
Of these four countries, only Malaysia met the IMF's ultimate economic targets - because it didn't follow IMF orders. It had a budget surplus in 1997, although it was the only country that did not cut social protection spending." Stiglitz summed up, "All the IMF did was make East Asia's recessions deeper, longer, and harder."
In the USA's crisis, "the rich got richer, and the sick got sicker." US death rates are 40 per cent above the European average - almost 40,000 extra deaths a year, largely because of the USA's poor health care system. The World Health Organization ranked the US health care system among the worst in developed countries in terms of death rates and reducing suffering.
When Britain founded the NHS, public debt was 400 per cent of GDP, far higher than in any European country today. Yet we did not cut the budget to reduce the deficit: Britain's successful social protection programmes helped to end the debt crisis. The NHS still saves more lives with less money than other systems. The Commonwealth Fund and the OECD said the NHS was the most efficient, effective and responsive health service in the world.
The EU now threatens all this: "Under EU competition law, the NHS would be fully opened up to compulsory competitive markets, and private corporations are to be eligible to receive the same government subsidies as publicly funded services." Clegg lied, "There will be no privatisation."
The authors conclude, "austerity involves the deadliest social policies. Recessions can hurt, but austerity kills." They urge, "Instead of austerity, we should enact evidence-based policies to protect health during hard times. Social protection saves lives. If administered correctly, these programs don't bust the budget, but - as we have shown throughout this book - they boost economic growth and improve public health."
on 30 May 2013
"To achieve a real, lasting human recovery, we must fundamentally change the way we think about what's important."
With that challenge, Stuckler and Basu end their new book, "The Body Economic: Why Austerity Kills." And indeed, their piece does pose a challenge, and a worthwhile one at that, to our young generation in the early 21st century. In stark juxtaposition to the predominant discourse of popular economic policy critiques - often filled with editorial-style politicized rants from one side of the right or left of the spectrum - Stuckler and Basu posit their arguments from the context of an impressively thorough and highly-critical review of data from the previous century. Their approach is a simple one: policy should be informed by a scientific analysis of what is known from prior experience, and should not be informed by opinion or the dominant political discourse of the day. In line with their background as well-trained epidemiologists and clinician-researchers, they employ rigorous statistical methods to identify trends and patterns across the entirety of the twentieth century's economic and public health data. In so doing, they demonstrate as objectively as possible, that their conclusions are well-grounded in not only theory, but pragmatic reality and history.
Predictably, much of the criticism for Stuckler and Basu's work will come from the ultra-conservative right, who will find their language and their conclusions unappealing at best, and downright heresy at worst. Having said that, regardless of the reader's personal political positions, it is difficult to imagine that any reader will be able to argue with the data presented, and the clear implications therein. In conducting their research and publishing it in the public domain, Stuckler and Basu have compiled a definitive and catalytic policy document, one that will hopefully amass great readership and discussion. Indeed, the questions they ask and the conclusions that they draw are at the heart of the problems that we face today in both economic and health policy. From all sides of the political spectrum, we must take their challenging discourse seriously; the fate of our generation and that of our children's depends upon it.
Dan Schwarz, MD, MPH
on 4 September 2014
The Body Economic by medical researchers David Stuckler & Sanjay Basu is a succinct, occasionally dry (at least to a layman like myself) yet ultimately enlightening polemic that attempts to prove that austerity in the face of economic depression is a counter-productive measure, that has serious implications to the health of the individuals affected by its implementation. The authors show, using rigorous analysis of the data of past economic crises, that looking after the health and needs of the body economic (a term coined by the authors in response to the “body politic”), rather than slashing health budgets and social safety nets, contributes to quicker and greater economic growth. This is an important and timely book that proves that our government's economic policy (which is based on ideology rather than evidence) is in need of radical rethink. A must read for anyone interested the true cost of austerity.