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Why austerity kills the poor

 INSP 03 June 2013

In a fascinating new book – The Body Economic: Why Austerity Kills – David Stuckler and Sanjay Basu argue that government cuts have resulted in 10,000 suicides in Europe and America since the economic crisis began. They say that not only is austerity bad for the economy, it is bad for people’s health. The authors explain why some debt-ridden nations have prevented a rise in suicides in stark contrast to others such as Greece, where economic-related deaths have jumped by 60 per cent. (2160 Words) - By Amy Mackinnon

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Mourners applaud as the coffin of Dimitris Christoulas, who shot himself at central Syntagma square on Wednesday, is carried during his funeral procession in Athens April 7, 2012. Photo: REUTERS/John Kolesidis

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A naked protester runs past the parliament in Syntagma Square in Athens during a violent protest against the visit of Germany's Chancellor Angela Merkel October 9, 2012.Photo: REUTERS/John Kolesidis

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Lambrousi Harikleia, an employee of the Workers Housing Organisation threatens to jump from the office where she worked because her wage has been cut and she and her husband were threatened with layoffs, in Athens February 15, 2012. Photo: REUTERS/Panagiotis Tzamaros

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Pensioners Carmen Ruiz (R), 82, and her husband Francisco Arias, 83, cry as they listen to a speech during a protest against further tax hikes and austerity cuts in Malaga, southern Spain October 7, 2012. Photo: REUTERS/Jon Nazca

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A couple push a television on a trolley in the Andalusian capital of Seville February 8, 2013. Photo: REUTERS/Marcelo del Pozo

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Hanna Hrytsyuk is helped by members of the Mortgage Victims' Platform (PAH) after having an anxiety attack as she was trying to convince her bank to stop her eviction, during a sit-in protest against home evictions in Madrid.Photo: REUTERS/Susana Vera

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Carmen Castilla, 77, dozes off as she sits with her family's belongings on the street that has been her home for the past two weeks in Madrid June 8, 2012.Photo: REUTERS/Susana Vera

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"The Body Economics" was published on May 21st.Book cover: Allen Lane publishers

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Public health specialist and author David Stuckler.Photo: Courtesy of David Stuckler

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A riot policeman walks by a homeless beggar during a rally to mark the 2008 shooting of a student by police in Athens' Syntagma (Constitution) square December 6, 2012. Photo: REUTERS/Yannis Behrakis


On March 28th 2012, Giuseppe Campaniello left for work earlier than usual. He would have kissed his wife goodbye, but she was sleeping so peacefully he decided to let her rest. Giuseppe then set off for the Equitalia tax office in his hometown of Bologna. Once there, he doused himself in petrol and set himself alight. He died nine days later in hospital. Giuseppe's cause of death? - Economics.

Just days before, he'd received a final notice from the tax office; doubling a fine he reportedly couldn't pay, which proved to be the final straw. As tragic as Giuseppe's story is, unfortunately it is not unique. Italy's detailed system for recording suicides has seen a large rise in the number of death certificates labelled, 'due to economic reasons.'

In fact, since the global recession began in 2007, there have been some 10,000 suicides across Europe and North America. Whilst no country has been untouched by the crisis, and many have fallen into recession, the impact on populations' physical and mental health has, curiously, been radically varied.

Iceland saw national debt levels jump to 800% of its gross domestic product - the highest of any nation in Europe - but its citizens' health has actually improved, suicide levels remained constant and Icelanders continually rank themselves as the happiest nation on earth. Greece, on the other hand, has seen a dramatic 60% increase in suicides, a return of Malaria and a doubling of HIV infection rates.

The reason for the above conundrum, according to a ground-breaking new book called 'The Body Economic,' is austerity. Authors David Stuckler and Sanjay Basu of Oxford and Stanford Universities, respectively, argue that not only is austerity bad for the economy, it is bad for our health.

Based on a decade of meticulous research, Stuckler and Basu concluded that when governments respond to recession with austerity measures, cutting away at social safety nets in a bid to reduce deficits, they put the most vulnerable society into an even more precarious situation, Furthermore, they said: "economic shocks such as losing a job or a home can subsequently turn into a health crisis." With their confidence rooted in a decade of detailed research, the authors are blunt - "recession hurts, but austerity kills."

Since the economic crisis began, the figure of 10,000 suicides is over and above pre-recession trends. "It's a correlation that's been well known since the 19th century, that people who lose their jobs are about twice as likely to end their lives prematurely," says Stuckler.

Their "eureka moment", Stuckler adds, came when they found that the link between recession, ill health and suicide was not necessarily an inevitability.  "What we found was that Sweden, Finland and other countries where politicians managed the consequences of unemployment well, were able to prevent a rise in suicide, despite large jumps in unemployment.'

These governments found that maintaining social and health care protection and enacting back to work programmes, allowed their citizens to weather the storm without an increase in levels of homelessness, illness or suicide.

"The comparison is perhaps the clearest between Iceland and Greece, which are at the two extremes', explains Stuckler. "Iceland also suffered a major banking crisis, all of its biggest banks failed, the stock market crashed 90%, and total debt jumped to more than 800% of its GDP - a figure larger than any European or North American country today. Yet its president took a radical step and called for a public vote on how to respond… 93% of Icelanders voted against financing bank bailouts with deep cuts to its health and social protection system. Thanks to the support to its national healthcare system, no-one lost access to healthcare in Iceland, even as the prices of imported medicine rose, we found no rise in suicides and depression."

Protection of social welfare also did little to harm Iceland's economic recovery, once one of the most precarious in Europe but now comparatively healthy, with unemployment levels below 5% and a GDP growth rate of 4%.

During an interview at the World Economic Forum in Davos, the Icelandic President Olafur Ragnar Grimmson famously said:

"We were wise enough not to follow the traditional prevailing orthodoxies of the Western financial world in the last 30 years. We introduced currency controls, we let the banks fail, we provided support for the poor, and we didn't introduce austerity measures like you're seeing here in Europe."

This is in stark contrast to Greece where, although public debt was lower than that of Iceland's, a sharp austerity agenda has produced dramatic results. Greece has become the pressure cooker of Europe with high levels of unemployment compounded by a 40% cut to the nation's health budgets. This combination has proved to be lethal; major pharmaceutical companies have pulled out of the country and pharmacies have de-stocked 200 essential medicines. With some hospitals running out of antibiotics, reports have emerged of patients queuing outside chemists in the early hours of the morning. The crisis is taking its toll on both peoples' mental and physical health, and the country - which once had one of the lowest pre-recession suicide rates in Europe - has seen a dramatic 60% increase. Furthermore, cuts to insecticide spraying programs in the southern part of the country saw malaria re-emerge for the first time in 40 years, and an outbreak of mosquito-borne West Nile Virus in August 2010, killed 62 people.

After six years of recession - which shows little sign of abating - widespread poverty, unemployment and a 25% increase in homelessness has driven some Greeks to illegal drugs such as heroin as a means of escape. The country has seen a 200% increase in HIV infection rates, the vast majority a result of more intravenous drug use. At the same time, budgets for needle exchange programs have been slashed. And while life-saving prescription drugs are increasingly scarce, dangerously cheap narcotics are now readily available. An investigative film by Vice magazine documented the emergence of a terrifying new drug called 'Shisha', aka 'cocaine of the poor.' At €2 a hit, the variant of crystal meth - often cut with battery acid and engine oil - is known to make users violent and aggressive.

"Desperate people turn to means of self-harm, seeing no way out," says Stuckler. "It's like lighting a match in an explosive situation, where more than 60% of youth are unemployed and, in some places, three quarters. A generation blighted by austerity with no real hope for the future.

"Austerity in health is a false economy. The epidemics in Greece in malaria and HIV will cost more now to control than they would have been to prevent. The cliché that an ounce of prevention is worth more than a pound of cure, is really true.

"In New York, city officials learnt this the hard way when they cut tuberculosis budgets by about 120 million dollars in the early 1990s. Two years later, they were faced with a drug-resistant outbreak of tuberculosis which cost more than 1.2 billion to control."

The IMF's recovery plan for the Greek economy set targets to keep expenditure on public health 'at or below 6% of GDP, while maintaining universal access and improving the quality of care delivery'.  However, Stuckler and Basu question where this seemingly arbitrary target came from, as 'all other Western countries spend far more than that to maintain basic healthcare. For example, the German government, a premier advocate of the austerity plan in Greece, spends more than 10% on healthcare.'

"I think this recession has taught a lot of doctors that I work with that economics is (sic) far too important to be left to economists," says Stuckler.

And not only are people losing their health as a result of austerity, they are losing their homes. In the United Kingdom, social housing programs were successful in reducing levels of homelessness by 50% between 2000 and 2007. Even as the recession and foreclosure crisis got underway in 2007, and the number of homes repossessed doubled, homelessness continued to fall.

However, it wasn't until 2010, when the Conservative-led coalition government came to power and promptly cut £8 billion from the government's affordable housing budget that homelessness rose sharply by 40%.

Whilst cuts to housing budgets were initially enacted as a way to save money, Stuckler argues that it will end up costing the state more in the long run. "What people sometimes fail to realize is that homelessness is, counter-intuitively, expensive. Homeless person's cycle through costly institutions; hospitals, jails. The best medicine for homeless persons, who on average live 40 years less than persons who have homes… is rapid rehousing. This costs upfront but as we show in the housing chapter, (the policy) saves money in the medium and long term."

Stuckler and Basu assess austerity as if it were part of a clinical trial, stating in the preface that they hope to 'inject hard evidence into the debate about austerity - a debate that has been shaped far more by ideology than facts.' Their scientific approach cuts like a scalpel through propaganda and ideology, which makes their findings all the more compelling.

Stuckler speaks bluntly about the results of this global experiment. "Had austerity been organised like a drug trial it would have been discontinued given evidence of its deadly side effects and its purported benefits have failed to materialize."

Whilst their methodical, scientific approach yields dramatic statistics, they also succeed in putting a human face to these numbers.

Interwoven into each chapter are individuals' stories which illustrate the human cost of austerity measures. They include the story of Dimitris Christoulas, a retired Greek pharmacist. Despite having paid into the system throughout his working life, the Greek government slashed his pension leaving him unable to afford his medication which rendered his life intolerable. On the morning of April 4th 2012, Dimitris walked up the steps to the Greek Parliament and declared, 'I am not committing suicide. They are killing me,' before putting a gun to his head and pulling the trigger.

A note found in his back-pack was later released. It said: "The Tsolakoglou government has annihilated all traces for my survival, which was based on a very dignified pension that I alone paid for 35 years with no help from the state… I see no other solution than this dignified end to my life, so I don't find myself fishing through garbage cans for my sustenance."

As Stuckler and Basu point out - in survey after survey - people are consistent about what they value most; their health and that of their families. When something this fundamental is threatened by austerity, questions must be raised as to why the policy is still being pursued.

In terms of our own personal finances, they say austerity makes sense. When faced with a debt or unexpected expense, the instinctive thing to do is to cautiously cut back on our expenditure until we have gotten on top of the situation. However, these home economics do not translate at a national level.  "When a government makes cuts, it is cutting someone else's income," explains Stuckler.  "So when we are all joined up in an economy, that cut of reducing [a person's] income, in turn lowers spending and demand in the economy, and in turn, businesses see their purchases dry up, forcing them to make more redundancies, leading to the negative spiral of a faltering economy.

"What the standard map for economic advice is, (is) to save during the good times and spend during the bad. What's needed is a spender of last resort to help break the vicious spiral of demand deflation which is precisely what we're in now. Those societies where politicians have pushed further on stimulus spending have seen faster economic recoveries such as Germany, Sweden and the USA."

Stuckler and Basu are not the only voices highlighting the false economy of austerity. The IMF's Chief Economist, Olivier Blanchard, admitted earlier this year, his organisation had underestimated the negative effect of austerity on employment and spending power, and so the IMF is now advising stimulus. The intellectual basis of austerity was further undermined last month when a graduate student in Massachusetts found errors and selective exclusions of data in a seminal study by Reinhart-Rogoff - often referred to as the 'bible' of austerity.  Once the errors were corrected, the paper's claim that debt over 90% of GDP leads to a fall in growth rate was made redundant.

With the logic of austerity coming under further scrutiny, and Stuckler and Basu's findings bringing to life the devastating impact it has on people's physical and mental well-being, the question remains - why are governments in countries such as the UK, Greece and Spain still pursuing an austerity agenda?

This is perhaps the only remaining aspect of austerity about which Stuckler is unsure:

"If it's not saving money, and it's causing people harm, the only explanation can be that it is ideological."

"People keep getting told that there is no alternative, but I hope that the book has shown there is one."

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