Well now we know. In a surprising reversal of
usual political policy, the pre-Budget policies floated in the media and
designed to scare the living crap out of people, were milder than what actually
turned up in the Budget. As a result, fear has tipped over into anger and
personally, I’ve never seen such a reaction to a Budget. When’s the last time
you saw protestors burning copies of the Budget? The only thing that isn’t a surprise is the
savagery with which healthcare funding has been attacked. It’s just par for the
course in these days of austerity measures after the Great Global Financial
Crisis of 2008.
There is a certain brutal logic to cutting the
health budget. With healthcare being one of the major items in the Budget, any
trimming done in that department is more effective than trimming in other areas.
A cynic might also say that it is easier to take a small amount of money from a
lot of poor people than it is to take a large amount of money from a small
group of rich people. But is taking a razor to the health budget really such a
good idea? New data from Europe would suggest not.
When Greece got into trouble and was slashing
government funding, healthcare took a major hit. When Spain moved into
austerity mode, the very first policy they announced was the removal of all
government subsidies on medication. A soft-hearted soul might think that that
would lead to a lot more deaths. And they would be right.
A recent article in New Scientist magazine, (1st March, 2014, p6) contained
some very scary statistics about the real effects of the healthcare slashing in
Greece. Between 2007 and 2011, suicides increased by 45 per cent, cases of
depression doubled and because all needle-exchange and free condom programs for
injecting drug users were cut, by 2012 new HIV cases were 32 times the 2009
levels. A hard-core economic rationalist in an unguarded moment might say,
‘Well who cares about druggies? As for the depression and suicides, suck it up
princess! It’s a time of crisis, everyone has to do their bit, we all have to
dig deep and tighten our belts etc etc.’ But there is one statistic that should
make everyone pause and have a bit of a think. In those same years, infant
mortality rose by 43 per cent. I’m pretty sure that not even Scrooge would say
‘suck it up princess’ to a new born child.
It’s time to ask, what the hell are our priorities?
Is keeping big banks and the IMF happy a good enough reason to virtually
sacrifice babies on the altar of ‘austerity’ and ‘economic responsibility’? How
‘responsible’ is it to cause that much death and suffering to your own people?
I know social disruption is not one of the economic values that banks factor in
to their equations, they only see debt and balance sheets, but maybe it’s time
that they did.
One of the few immutable laws of economics and
finance is that debt grows faster than income. A small example would be, how
much interest do you pay on your
credit card and much do you receive
on your savings account? Bit of a gap there I think. Taken up to the macro
level this means that any government, regardless of their ideology, given
enough time will start seeing their debt burden grow. If you add an unexpected
financial crisis, that debt will grow even quicker. When debt starts to really
balloon and government debt overtakes national GDP, barring a miracle, there is
simply no way for that debt to be ever paid back.
Banks and governments know this. However much banks
insist that governments must pay off all their debts, they know it will never
happen. That’s when deals start to be made behind closed doors. That’s when
debt gets re-structured, re-negotiated, rolled over or re-financed. Bail outs
are offered, temporary loans are given and private creditors are asked to take
a ‘shave’ on what they are owed. You may be interested to know that last time I
heard, the private creditors of the Greek government were asked to take a
‘shave’ of 74 per cent of what they were owed. Which is more an amputation
really, than a ‘shave’.
The point is: deals will be made. Debts will be
partially forgiven. The country will survive and eventually struggle back to some
form of economic health. My question is: if we all know what the end game will
be, if we all know where this is heading, if austerity measures are ultimately
pointless and destructive, why are we spending so much time on them? If we know
Act Three is waiting in the wings, couldn’t we fast forward through the pain
and boredom of Act Two and stop inflicting so much misery on our own
population? How much of a sacrifice do poor people have to make to maintain the
purity of an economic theory? How many babies need to die to keep bankers
happy?
If that last sentence strikes you as extreme and
inflammatory, as opposed to diabolically accurate, it’s a measure of how
distant economic theory is from real life. Maybe it’s time for economics to be
wrangled into serving real people, instead of forcing people to adapt to dubious
economic theories that promise nothing but pain.
