“This was not suicide,” a protester later said. “He was murdered.” A mourner nailed a note to a tree near the spot where Christoulas died. “Enough is enough,” it read. “Who will be the next victim?”
Olivia and Christoulas may have been 5,000 miles apart, but their lives were woven together by the worst economic crisis since the Great Depression. As two public health researchers—one at Stanford in California and the other at Oxford, En gland—we became concerned that the Great Recession would take its toll on people’s bodies. We heard stories from our patients, friends, and neighbors who lost their health insurance but also experienced harms that went well beyond the medical clinic or the pharmacy, intruding upon the very fabric of their lives—their ability to afford healthy food to eat, avoid the high stress of losing a job, and keep a roof over their heads. We wondered what impact the Great Recession would have on the rates of heart disease, of suicide and depression, and even the spread of contagious diseases.
In search of answers, we have mined data from around the globe and from decades of prior recessions. We’ve found that public health can be profoundly affected by economic shocks. Some of our findings were expected. When people lose jobs, they are more likely to turn to drugs and alcohol or become suicidal. When they lose their homes, or are mired in debt, they often turn to junk food, for comfort or simply to save money.
Tragic as they are, the misfortunes of people like Olivia and Dimitris are unsurprising. More than 600 Greek citizens killed themselves in 2012. Before the Great Recession, Greece had the lowest suicide rate in Europe. Now that rate has doubled.5 And Greece isn’t alone. Suicides in the other European Union countries had been dropping consistently for over twenty years until the Great Recession.
But in our global research, we also encountered some surprises. Some communities, even entire nations, became healthier than ever as their economies were devastated. Iceland went through the worst bank crisis of all time, but the population’s health actually improved. Health in Sweden and Canada also improved. Norway reached its highest life expectancy ever. But this had nothing to do with the cold climate. Japan, which had suffered a “lost decade” from the prolonged effects of recurrent recessions, now reports some of the best health statistics in the world.
Some economists looked at these data and concluded that recessions were “a lifestyle blessing in disguise,” the cause of these health gains. Thanks to losing income in the Great Recession, they argued, people would get healthy: drink and smoke less, and walk rather than drive. They were finding that recessions correlated with a drop in death rates in many places. Looking grimly into the future, one economist predicted that an economic recovery will kill 60,000 people in the United States. Such odd and counter-intuitive pronouncements are contradicted by data from health departments around the world. During the Great Recession, life expectancy in the United States appeared to fall in some counties for the first time in at least four decades. In London, heart attacks rose by 2,000 amid the market turmoil. And suicide and alcohol death reports keep piling up on our desks.6
These data were a puzzle. How had some people become healthier during recessions, while others ended up like Olivia and Dimitris?
The answers could be found in the politics of the Great Recession. The 2012 US presidential election helped define a seemingly eternal debate between austerity and stimulus, services and revenue. Lo and behold, austerity lost. President Barack Obama campaigned on raising taxes on the wealthy and investing in social services, and he won. As the US climbs slowly out of recession, other countries should take note. Britain, under a Conservative Party government since 2010, has enacted an austerity regime that has, as of January 2013, shown signs of sending the country back into recession.
Over the past decade, we’ve looked through reams of data and reports in search of answers. Austerity or stimulus? Cuts or hikes in taxes to the rich? Cuts or hikes in services to the poor? We traveled from the coldest gulag in Siberia, to the red-light district of Bangkok, to the biggest intensive-care unit in the United States to find answers. The data we’ve gathered lead irrevocably to this conclusion: societies that prevented epidemics during recessions almost always had strong safety nets, strong social protection.
Disasters like Olivia’s inferno and Dimitris’s suicide do not always follow economic downturns. Rather, they are the consequences of a simple political choice—a choice to bail out bankers and cut safety nets for everyone else. Just a few key decisions, we’ve found, can stop a recession from turning into an epidemic. But our research shows that austerity involves the deadliest social policies. Recessions can hurt, but austerity kills.
The world’s biggest economic adviser, the International Monetary Fund (IMF), was once a leading proponent of austerity cuts to safety nets in recessions. In a recent report, the IMF reversed its policy. Now it finds that austerity actually slows down economies, worsens unemployment, and hampers investor confidence. In Europe, businesses are now clamoring against austerity, having seen their demand dry up. The safety net policies that we advocate for not only boost people’s health but help people return to work, maintain their incomes, and keep the economy going in bad times.7
Collectively, we have lost sight of what matters most. Debts, revenue, and growth are important. But when you ask people around the world what they value most, they don’t pull their wallets out of their pockets, or talk about the new additions to their homes, or the brands of their cars, or even the latest gadget in the Apple store. In survey after survey, people are consistent about what they care about. Above all, they say they value their health and that of their families.
Suppose we reframe the debate to focus on “body economics”: the health effects of our economic policies. Since our economic choices have a huge impact on health, they ought to pass the same rigorous tests that we apply to other things that affect our health, like pharmaceuticals. If economic policies had to be proven “safe” and “effective,” just like any drug being approved for our patients, we might have an opportunity to make our societies safer and healthier. Instead, at the moment, in those countries where austerity is ascendant, we’re undergoing a massive and untested experiment on human health, and left to count the dead.
The price of austerity is calculated in human lives. And these lost lives won’t return when the stock market bounces back.
PART I
HISTORY
1
TEMPERING THE GREAT DEPRESSION
“I will never forgive them,” wrote thirteen-year-old Kieran McArdle to the Daily Record, a national newspaper based in Glasgow. “I won’t be able to come to terms with my dad’s death until I get justice for him.”1
Kieran’s father, fifty-seven-year-old Brian, had worked as a security guard in Lanarkshire, near Glasgow. The day after Christmas 2011, Brian had a stroke, which left him paralyzed on his left side, blind in one eye, and unable to speak. He could no longer continue working to support his family, so he signed up for disability income from the British government.
That government, in the hands of Conservative Prime Minister David Cameron since the 2010 elections, would prove no friend to the McArdles. Cameron claimed that hundreds of thousands of Britons were cheating the government’s disability system. The Department for Work and Pensions begged to differ. It estimated that less than 1 percent of disability benefit funds went to people who were not genuinely disabled.2
Still, Cameron proceeded to cut billions of pounds from welfare benefits including support for the disabled. To try to meet Cameron’s targets, the Department for Work and Pensions hired Atos, a private French “systems integration” firm. Atos billed the government £400 million to carry out medical evaluations of people receiving disability benefits.3
Kieran’s father was scheduled for an appointment to complete Atos’s battery of “fitness for work” tests. He was nervous. Since his stroke, he had trouble walking, and was worried about how his motorized wheelchair would get up the stairs to his appointment, as
he had learned that about a quarter of Atos’s disability evaluations took place in buildings that were not wheelchair accessible. “Even though my dad had another stroke just days before his assessment, he was determined to go,” said Kieran. “He tried his best to walk and talk because he was a very proud man.” 4
Brian did manage to reach Atos’s evaluation site, and after the evaluation, made his way home. A few weeks later, his family received a letter from the Department for Work and Pensions. The family’s Employment and Support Allowance benefits were being stopped. Atos had found Brian “fit for work.” The next day he collapsed and died.
It was hard for us, as public health researchers, to understand the government’s position. The Department for Work and Pensions, after all, considered cheating a relatively minor issue. The total sum of disability fraud for “conditions of entitlement” was £2 million, far less than the contract to hire Atos, and the Department estimated that greater harm resulted from the accidental underpayment of £70 million each year. But the government’s fiscal ideology had created the impetus for radical cuts.5
Across the Atlantic in the United States, President Barack Obama spoke of the ongoing recession as the worst economic crisis since the Great Depression. The comparison was apt. People began looking to politicians and economists of the Depression era for guidance on how to proceed during this newest downturn. Republican President Herbert Hoover and Democratic President Franklin Delano Roosevelt had governed during the Depression in the United States, and the British economist John Maynard Keynes had championed an activist governmental policy of stimulus spending to end the Depression.6
In the first panicked months of 2008, few people questioned a need to act swiftly to rescue the economy. The salient question was how: increased spending or budget cuts? There was a real fear that if the banks went under, entire national economies would collapse. The financial sector had become such a large part of economic life that politicians deemed some banks “too big to fail.” If we let them collapse, the damage would be even more catastrophic to the economy than the high price of helping them—there would be more panic, chaotic bank runs, and less money for entrepreneurs and small businesses.7
The US and European governments mobilized an unprecedented rescue package for the banking sector. Although the banks had lost private money, public funds from taxpayers would be used to bail them out—to the tune of over $2 trillion in the US and UK. Witnessing this massive rise in government spending, Martin Wolf, a journalist at the Financial Times, proclaimed, “We are all Keynesians now.” He may have spoken too soon.8
In response to the massive government debt, conservative politicians in the United States and Europe launched their new economic policy: a drive to reduce spending not by lowering entitlements to private corporations like banks, but by attacking social welfare spending.
In the UK, the Conservatives’ case for austerity was simple: the government had a huge debt overhang, and now that debt needed to be paid back. If it was not, it would become harder and harder to borrow money, and more costly to repay. No one, after all, wants to lend money to an entity living on credit, so interest rates would increase and make debt repayment even more difficult. If we simply printed money, our currency would be worth less because of inflation, creating hard times in an already troubled economy. So the only option left, they argued, was to cut back on welfare spending—the programs that Cameron argued were slowing down the economy.9
This argument was simple, intuitive, and wrong. It was, as the Nobel Prize–winning economist Paul Krugman put it, akin “to the claim that soup kitchens caused the Great Depression.”10
Government debt isn’t like personal debt. If one of us misses a mortgage payment, we risk damaging our credit rating, and possibly even losing our home. So if we owe money, we need to find a way to pay it back as soon as possible. But government debt does not need to be paid back overnight—in fact, it can be dangerous to do so. In an economy where we’re all in the same boat, one person’s spending is another person’s income. So when the government cuts spending, it reduces people’s income, leading to less business, more unemployment, and a vicious spiral of slowing down the economy.
The central goal in debt management is to keep debts sustainable. To be sustainable, government debt repayments should be kept lower than the rate of revenue from economic growth. If that happens, we will grow out of debt, as economic stimulus leads to more income and more tax revenues to reduce the debt. But budget cuts have slowed down growth—and this is precisely why, in spite of all the UK’s radical cuts, the latest data show that British debt continues to rise.11
As public health researchers, we were shocked and concerned at the illogic of the austerity advocates, and the hard data on its human and economic costs. We realized the impact of the Great Recession went far beyond people losing their homes and jobs. It was a full-scale assault on people’s health. At the heart of the argument was the question of what it means to be a society, and what the appropriate role of government is in protecting people.
Economists were studying the Great Depression for guidance on how to end the Great Recession. They were poring through historical statistics on economic growth. We went in a different direction, and started digging through the archives of the United States Public Health Service to find out how and why people died during the Depression. The patterns we found were not all ominous—indeed, we found that some people actually became healthier during the Great Depression. What determined their health had not only to do with economic cycles, but critically depended on how politicians chose to respond to the crisis. The Depression revealed that some political choices can simultaneously improve health and help the economy recover.
The first clue came from understanding how the Depression itself started. The Depression can be traced back to the panicked selling of 16 million shares of stock on Black Tuesday, October 29, 1929. But the roots of the Depression lay in a series of events that are strikingly similar to the Great Recession—stark inequality, a real estate bubble, and a banking crisis.12
During the late 1920s, the US super-rich—the Fords, Vanderbilts, Carnegies, and Rockefellers—were the masters of the country’s financial markets. This top 1 percent of the population held over 40 percent of America’s wealth, and their investments drove the rise and fall of stock prices, as well as a real estate bubble. There was an “orgy of apartment building” in Florida during the Roaring Twenties, as lots in Miami were bought and sold as many as ten times in a single day. Commercial lending banks loosened loan conditions, and mortgages were easy to get. Mortgage-related debt doubled between 1922 and 1928.13
Eventually the housing bubble burst, leading to the 1929 Crash. In the Depression that followed, more than 90,000 businesses went bankrupt and at least 13 million Americans—one in four workers—became unemployed. Half a million farmers lost their land. Three out of five Americans were classified as living in poverty. Shantytowns of ramshackle cardboard boxes and tents sprang up into slums called “Hoovervilles” in a nod to President Hoover. Soup kitchens and bread lines were everywhere.14
As we looked through these poverty statistics from the Depression, we expected the impact on people’s health to be seismic, and tragic. And some of it was. After Black Tuesday, suicide rates rose. While reports of brokers and bankers jumping out of windows were rife, one of the first documented suicides was a construction worker helping build the Empire State Building: he had been laid off and jumped from it to his death. He was representative of the stress placed on the working class. The risk of suicide was actually concentrated not among those who lost their bets in the stock market, but among those with the least savings, the least opportunity to get a new job after being laid off, and the highest risk of losing their homes or being unable to feed their families if they lost their income.15
But we were surprised by some counterintuitive findings as well. For example, Dr. Louis Dublin, an actuary at the Metropolitan Life Insurance Company, announced in 1932:
“Never before have there been such satisfactory health conditions in the United States and Canada as during the first nine months of this year.” His job was to track death rates for the company’s 19 million policyholders. He found that mortality among white policyholders was well below the previous minimum in 1927; among blacks, the death rate was the lowest in a decade.16
Perhaps our assumptions about financial crises and health were wrong. Stress alone might not explain the deaths of people during recessions. Something else might be at play. But first we had to determine if Dublin’s statistics were accurate. One possibility was that statistics from people who had insurance might tell only half the story. People with insurance were probably better off, and so data from insurance companies might be hiding the full picture of suffering among poorer people who were not part of Dublin’s datasets.
Digging deeper, however, we found that other data sources confirmed the insurance company’s reports. Dr. Edgar Sydenstricker, a statistician for the US Public Health Service who independently examined death certificates from the entire country, came to the same conclusion. In 1933 he wrote, “1931 was one of the healthiest years in the history of the country,” adding that “After several years of severe economic stress, the gross death rate has attained the lowest level on record. Infant and tuberculosis mortality have not increased in the country as a whole; on the contrary they have continued to decline.”17
Public health experts were puzzled by the trends in the data. The US Surgeon General attributed the health improvement to a mild winter, suggesting that it might have staved off an “unpreventable epidemic,” such as typhoid or whooping cough. Not everyone was convinced by this explanation, especially since a mild winter one year during the Depression was actually contrasted by harsher winters during the other years. An alternative argument was that the Depression itself was the reason for health improvements, although the reasons why were not obvious. Perhaps laboratory studies might shed light on why death rates improved during hard economic times. In 1928, the American biologist Raymond Pearl had published a classic study of fruit flies that found the flies that grew the most rapidly had the shortest lifespans. Applying these arguments to humans, some commentators proposed that society’s fast pace of living during the Roaring Twenties—the fast and furious lifestyle of alcohol and cigarettes—had produced backward trends in health, which began to reverse as the Depression produced a calmer, more “normal mode of living.” When people lost jobs, rather than working long hours, they might spend more time with their families or choose to exercise more. And when people lost income they would drink and smoke less, or walk instead of drive. All these changes would act to improve their health.18
The Body Economic Page 2