David Stuckler completed his Masters in Public Health at Yale University and PhD at Cambridge University. In addition to over 100 scientific articles in major journals, he has co-written The Body Economic: Why Austerity Kills, with Dr Sanjay Basu, which was published this year by Allen Lane.
What’s the story behind The Body Economic?
We’ve been studying how economic shocks, such as losing a job or a home, affect people’s health over the past decade. Our research has mined large datasets, from the Great Depression to the Asian Financial Crisis to the recent recessions in Europe and North America. Recessions can hurt, but don’t necessarily lead to a rise in mortality rates. Fiscal policy is a matter of life and death. Soon after the crisis began in 2007, we began seeing early warning signs that people’s health was suffering – rising suicides, alcoholism, and lost access to healthcare. Meanwhile politicians debated endlessly, with little regard for the human costs of their decisions. Our book shows that, through smart, data-driven approaches, it is possible not only to reduce debts, but also protect the nation’s health.
In what way does economic crisis impact on a society’s health?
We found that recessions, perhaps counter-intuitively, tend to correlate with improvements in mortality. For example, when people’s income falls they may walk instead of drive, saving money on fuel costs. In the US Great Depression of the 1930s, mortality rates actually fell by about 10 per cent. Even though suicide rates rose, it was outweighed by a fall in road accidents, for the first time in the history of the automobile. Again, in 2011, US road traffic deaths hit a 60 year low. The real danger is austerity. When politicians make deep, indiscriminate cuts to vital support, they can turn economic hardship into severe epidemics.
In the book you say that ‘austerity is simple, intuitive, but wrong’. But doesn’t it make sense to cut spending and reduce debt?
Government spending isn’t like household budgets. When a government cuts spending, it reduces people’s incomes. This leads to less spending in the economy and reduced demand for businesses, creating a vicious cycle of more job losses and a slowing economy. In contrast, advocates of austerity suggest that cutting budgets will attract private sector investment and help the economy recover. The way to resolve this debate is with data. The International Monetary Fund, once the leading advocate of austerity, had assumed that austerity would help the economy recover. In 2012, its economists reviewed the data, reporting that “we underestimated the negative effect of austerity on employment and spending power.” Across Europe we found that the societies that have pursued deeper cuts have had slower economic recoveries, such as Greece and the UK. In contrast, ‘stimulus’ countries, which invested more into the crisis, such as Germany, Sweden and the US, have benefited.
Does government investment into health and social protection pay economic dividends?
Yes. We found that health, education and social protection had some of the greatest and most positive returns on investment. We estimated a statistic known as the ‘fiscal multiplier’, measuring the effect of government spending on economic growth. When fiscal multipliers are greater than 1, each pound invested yields more than 1 in growth – a net gain. Investments in health saw multiplier greater than 3 – so each £1 generated up to a £3 return. In contrast, multipliers for defence spending and bank bailouts tended to be smaller and sometimes negative multipliers, as spending led to trade deficits when money flowed to foreign contractors or offshore tax havens. Collectively we seem to be losing sight of our history. In the Great Depression, President Franklin Roosevelt instituted the New Deal, founding the US system of social security. It was the same in the UK, in the aftermath of WWII, when the economy was in a shambles, rather than making deep cuts, the government instituted the Welfare State – founding the National Health Service and precursors to Universal Child Benefit. It didn’t break the bank. 1948 – the year the NHS was founded – was the year that debt began to fall from its peak of over 230 per cent in the UK.
If the price of continued austerity is to be calculated in human lives, how do we break the cycle?
Sometimes we seem to blindly accept suffering that comes with economic hardship but the historical data shows there are smart investments that can save money and improve public health. We call for a ‘New New Deal’ – to help end Europe’s recessions, and chart a path to a happier, healthier future. To work it would follow three guiding principles. ‘First ‘do no harm’. This ancient law of higher healing should guide economic policy. Had austerity been organised like a drug trial then it would have been stopped, given the evidence of its deadly side effects. Second, we should treat unemployment like the pandemic it is – a leading cause of suicide, alcoholism and heart attacks. In Sweden and Finland where politicians have better managed the social consequences of unemployment, job losses haven’t led to marked rises in suicides and depression. Third, invest in public health. The cliché an ounce of prevention is worth a pound of cure is really true. Greece’s epidemics – HIV, malaria, and drug-resistant infections – are now costing more to control than they would have been to prevent. Investing in health is a wise choice in good times and an urgent necessity in the worst of times.