The Body Economic: Why Austerity Kills

Healthcare cuts and unemployment cause a host of societal ills, yet Europe refuses to save its citizens, says Richard Fitzpatrick

BRIAN McArdle worked as a security guard in Lanarkshire, near Glasgow. He was 57 years old when he had a stroke on St Stephen’s Day, 2011. It left him paralysed on his left side, blind in one eye, and unable to speak. He signed up for disability income.

David Cameron, in the 2010 British election, said that hundreds of thousands of Britons were cheating the disability system. He promised to root them out. On taking office, his government hired a French company, Atos, to evaluate disabled people, like Brian McArdle.

The Scot was nervous before taking Atos’s “fitness for work” tests. He had trouble walking, and was anxious about how his motorised wheelchair would get up the stairs to his appointment, as he’d learned that a quarter of Atos’s disability evaluations were in buildings that were not wheelchair accessible.

“Even though my dad had another stroke, just days before his assessment, he was determined to go. He tried his best to walk and talk, because he was a very proud man,” said his 13-year-old son, Kieran, in an interview with a Scottish newspaper. McArdle completed Atos’s tests.

A few weeks later, McArdle received a letter from the department for work and pensions. He was “fit for work” it stated. His disability benefits were being stopped. The next day, he collapsed and died.

As David Stuckler and Sanjay Basu write in their book The Body Economic: Why Austerity Kills, disability fraud in Britain in 2011/2012 for “conditions of entitlement” was £2m. The bill for hiring “systems integration” experts, Atos, to cut its welfare benefits, was £400m.

“Austerity for healthcare is a false economy,” says Stuckler, a professor at Oxford University and an expert in public health and political economy. “It is much more expensive to spend when in the grip of an epidemic than to prevent an outbreak in the first place. In New York City, officials learnt this the hard way in the 1990s when the city cut its tuberculosis-prevention budget, but, ultimately, had to spend more than $1bn to control a drug-resistant TB epidemic among its homeless and deprived populations.”

The numbers of homeless people in Ireland have increased dramatically since the Government’s bank guarantee in September, 2008. Homeless charity, Cork Simon, had a 62% hike in ‘residents’ between 2009 and 2011. Homeless people die 40 years prematurely.

Austerity, as Stuckler and Basu says, kills. Recent events in Greece offer the most disturbing evidence. Since the country’s European Commission-ECB-IMF austerity plan, a variation on the troika’s ‘medicine’ for Ireland, there has been a return of malaria, and homicides have increased, as has HIV, by more than 200%. Before the recession, Greece had the lowest rate of suicide in Europe. Now, its rate of suicide has doubled.

It doesn’t have to be this way, however.

“Standard economics advice is that you save money in good times and you spend in the bad,” says Stuckler. “When demand has fallen, there’s a need for ‘a spender of last resort’. It takes money to make money. Spending in public health, in particular, we found is one of the best bangs for buck.

“Public funds translate into employment and provide valuable services that protect the nation’s health. Each euro invested in public health can deliver up to a €3 boost for growth, when done correctly.”

Stuckler and Baku make a compelling argument for choosing stimulus packages over austerity. Britain, for example, since Cameron introduced swingeing public-welfare cuts in October 2010, is headed back towards recession. The United States, in contrast, which benefited from President Barack Obama’s May 2009 stimulus package, is recovering. Its GDP, for instance, is greater than it was before the financial crisis began.

Recent European economic history has several, similar success stories.

Sweden and Finland endured massive financial crashes in the early 1990s, but both countries preserved their social-safety nets. In Sweden and Finland, there was no significant rise in suicide rates, despite a jump in unemployment. In Finland, life expectancy hit an all-time high.

“Ireland’s unemployment recently dipped to 14%, but this is hardly cause for celebration. We need to treat unemployment like the pandemic it is — a leading cause of depression, suicide, and alcoholism. Smart investments in ‘active labour-market programs’ can help people return to work, prevent depression and suicide, and spur economic recovery,” says Stuckler.

“Recovery has been slower than the United States, slower than the UK and, indeed, Ireland’s economy still hasn’t recovered — its GDP is about 8% below what it was before the crisis in 2007.

“The healthcare service is taking the brunt of the cuts. It has reduced healthcare coverage for people over 70. There’s been an increase in prescription charges for low-income groups, coinciding with a doubling of people unable to access medical care, because it’s too expensive. We’re seeing signs of a mental-health crisis in Ireland. Suicides jumped 24% early in the crisis, from 2007 to 2009, rose again by 27% in 2010, as unemployment escalated, and by 7% last year,” says Stuckler.

Iceland is a radically different tale. Its people said ‘no’ to austerity measures proposed by the IMF, following the country’s worst banking crisis. In a March 2010 referendum, 93% voted against paying back its bank debt. Its decision has been vindicated. The country has prospered. Last year, it made repayments on its loans, ahead of schedule. Unemployment is at 5%. Most importantly, public health improved in Iceland during its recession.

“Had austerity been run like a drug trial, it would have been discontinued, given evidence of its deadly side-effects,” says Stuckler.

*The Body Economic: Why Austerity Kills BY David Stuckler and Sanjay Basu; Allen Lane, an imprint of Penguin Books, €21.

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