Austerity kills according to latest research

Austerity is not just bad for the economy. The latest evidence shows that it is also bad for people’s health. 

Austerity has led to rising suicide rates, increased rates of disease and dramatic reductions in access to healthcare for people unable to pay for such care from their private resources. A new study entitled ‘The Body Economic: Why Austerity Kills’ concludes that "Recessions can hurt, but austerity kills."

This study shows that countries that cut their health and social protection budgets, like Greece, Italy and Spain, have seen far worse health outcomes than nations like Germany, Iceland and Sweden, which maintained their social safety nets and opted for stimulus over austerity. 

The authors of this study are David Stuckler, a senior research leader in sociology at Oxford, and Sanjay Basu, an assistant professor of medicine and an epidemiologist in the Prevention Research Center at Stanford. In anarticle in the New York Times they stated: “As scholars of public health and political economy, we have watched aghast as politicians endlessly debate debts and deficits with little regard for the human costs of their decisions. Over the past decade, we mined huge data sets from across the globe to understand how economic shocks — from the Great Depression to the end of the Soviet Union to the Asian financial crisis to the Great Recession — affect our health. What we’ve found is that people do not inevitably get sick or die because the economy has faltered. Fiscal policy, it turns out, can be a matter of life or death.”

The mass of data now analysed by Stuckler and Basu reveals that more than 10,000 additional suicides and up to a million extra cases of depression have been recorded across Europe and North America since governments started introducing austerity programmes in the aftermath of the current crisis. These are staggering statistics that must not be ignored by Government.

The austerity programmes administered by western governments in the wake of the 2008 global financial crisis were intended as a remedy, a tough but necessary course of treatment to relieve the symptoms of debts and deficits and to cure recession. But austerity has not been working. Not just that, it having a devastating impact on a great many people. In practice, this approach is now producing side effects –such as the profound effects of economic choices on health – that make an overwhelming case for its termination and replacement with an alternative approach that is sustainable and humane.

Stuckler and Basu argue that politicians should take the message they have uncovered in the data seriously, and start basing policy on evidence rather than ideology.  It is long past the time when politicians accepted this approach.  When times are hard, governments need to invest more and where cuts are necessary then they should cut where it does least harm. It is dangerous and economically damaging to cut vital supports at a time when people need them most.

Did Ireland have a choice?

It appears we had. In the New York Times article already referred to Stuckler and Basu pointed to Iceland and how its response to the crisis produced a very different outcome. They state: “In contrast (to Greece), Iceland avoided a public health disaster even though it experienced, in 2008, the largest banking crisis in history, relative to the size of its economy. After three main commercial banks failed, total debt soared, unemployment increased nine-fold, and the value of its currency, the krona, collapsed. Iceland became the first European country to seek an I.M.F. bailout since 1976. But instead of bailing out the banks and slashing budgets, as the I.M.F. demanded, Iceland’s politicians took a radical step: they put austerity to a vote. In two referendums, in 2010 and 2011, Icelanders voted overwhelmingly to pay off foreign creditors gradually, rather than all at once through austerity. Iceland’s economy has largely recovered, while Greece’s teeters on collapse. No one lost health care coverage or access to medication, even as the price of imported drugs rose. There was no significant increase in suicide. Last year (2012), the first U.N. World Happiness Report ranked Iceland as one of the world’s happiest nations.

“Sceptics will point to structural differences between Greece and Iceland. Greece’s membership in the euro zone made currency devaluation impossible, and it had less political room to reject I.M.F. calls for austerity. But the contrast supports our thesis that an economic crisis does not necessarily have to involve a public health crisis.”

What should Ireland do now?

For years Social Justice Ireland has urged Government and the ‘Troika’ to integrate the economic and social dimensions of policy development. We have produced a wide range of studies showing how this could be done. For the most part, however, our urging has fallen on deaf ears. During the current crisis there have been dramatic rises in poverty, unemployment, social housing waiting lists as Government has insisted that the taxpayers rescue reckless banks and pay for the losses incurred by gambling bondholders. In doing this Government has made decisions that were regressive i.e. those on low and middle incomes have paid an unfair proportion of the ‘hit’ incurred by Government’s decisions.