Posts Tagged ‘Great Recession’

The Body Economic: Why Austerity Kills

July 16, 2016

Body Economic Pic

By David Stuckler, MPH, PhD, and Sanjay Basu, MD, PhD (New York: Basic Books 2013)

This is another book I picked up in the £3 bookshop in Bristol’s Park Street the other day. Written by two American health researchers, it examines the way economic recessions and austerity affect people’s health from the Great Recession of the 1930s, the Fall of Communism, Greece and Iceland, and today’s recession, which began with the banking collapse in 2008. The authors are medical researchers, whose own experience of poverty and ill health has led them to examine its effect on entire societies. They conclude that while recessions often lead to high – frequently devastatingly high outbreaks of disease and mortality, what is really crucial is the state’s handling of them. In countries which have a strong welfare state, and are determined to invest into getting their citizens back into work, such as Denmark in the 1990s, public health may actually improve. And as public health improves, the economy begins to pick up. In countries where the opposite is true – where the state just cuts, and is intent on dismantling the welfare infrastructure, like Greece and Cameron’s (and May’s) Britain, the result is higher disease and mortality.

As well as giving the impersonal stats, they also illustrate the damaging effects of austerity on public health through personal case studies. These include ‘Olivia’, a little girl, who suffered terrible burns when her unemployed father tried to burn their house down in a drunken rage, and an elderly Greek man, Dimitris Christoulas. Unable to see any way out of his poverty, he publicly shot himself outside the Greek parliament building.

One of the victims of austerity mentioned in the very first pages of the book is Brian McArdle, a severely disabled man, who was nevertheless declared ‘fit for work by ATOS. Basu and Stuckler write

‘”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.”

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.

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.

Kieran’s father was scheduled for an appointment to complete Atos’ 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.”

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 relative 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. (Pp. 3-4).

I don’t know whether Mr McArdle was one of those, whose deaths has been commemorated by Stilloaks on his blog, or whether his case was one of those which Cameron and aIDS laughed at when they were read out in parliament. But is notable that such cases are coming to the attention of health researchers and medical doctors, and are a cause of serious academic and medical concern.

Stilloaks, Mike, DPAC, the Angry Yorkshireman and very many other disability activists have covered individual cases, and the way the ‘fitness for work’ tests have been fiddled by Atos and now their successors, Maximus, in order to provide the pretext for throwing the vulnerable off benefits. Mike’s called it ‘Chequebook Genocide’. Jeff3, one of the great long-term commenters on this blog, refers to it as the Tories’ Aktion T4 – the Nazi’s extermination of the disabled during the Third Reich. There have been about 490 cases in which people have died of starvation, neglect and despair thanks to be thrown off welfare. And according to mental health profession, about 290,000 or so people have seen their mental health deteriorate – sometimes very severely – due to the stress of these tests.

Books like this show how counterproductive such austerity policies are, as well as their purely destructive effects on human life. But this will not be heeded by the Tories, nor by the baying, right-wing rabble who blindly follow them. They want to grind the poor even further into the dirt, to create an impoverished, desperate working class willing to take on any kind of work, no matter how low-paid, not-paid – think of all the unpaid ‘internships’ – and degrading. All so they cut taxes and give more power to the rich, the bankers, big business and particularly the hedge funds and vulture capitalists.

And so the many are killed, all for the privileged few represented by Theresa May.

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Shirley Williams on Economic Disruption by Trade Unions and Big Business

May 21, 2016

Shirley Williams, the former Labour MP, who then went off to form the SDP in the 1980s, also discusses the alleged damage for which the trade unions were allegedly responsible to the economy, in her 1981 book, Politics Is For People (Harmondsworth: Penguin). She concedes that some industrial problems were due to inflationary wage demands by the unions, but also believed that big business was also guilty of the same policies themselves. She also argued that the unions’ pay policy also had a beneficial effect, and that where strikes broke out, it was because the workers were poorly treated, and not given sufficient information on their predicament by the management. She wrote:

Trade unions are held responsible for many of Britain’s economic weaknesses, but criticism of unions is by no means restricted to Britain.

The power of unions and their irresponsibility, so one would have to conclude from the pronouncements of neoclassical economics, business representatives and conservative parties, is the one single factor (apart, perhaps, from the greed of the OPEC countries) which explains most of what is presently wrong with western economies. By raising the price of unskilled labour beyond its market value, union wages are said to be the major cause of unemployment, and by exploiting the scarcity value of skilled labour, they are said to be directly responsible for wage-push inflation.

Thus writes Fritz Scharpf, Direct of the Wissenschaftszentrum, Berlin, in a paper entitled Capitalism of Yesteryear – and of Tomorrow?

Apart from their effect on wages, trade unions are alleged to disrupt production schedules and delivery dates by strikes, both official and unofficial. The growth and prosperity of industry are damaged by restrictive practices such as overmanning, fragmentation of jobs by craft unions, limits on the output of individual workers or of equipment, and burdensome conditions before agreement can be reached on installing new machinery or introducing new processes. ‘Productivity is now importantly hampered by overmanning and restrictive practices which, if they could be reduced or removed, would allow rapid increases in productivity,’ concludes the OECD’s 1980 Economic Survey of the United Kingdom.

But restrictive practices are by no means limited to the labour market, as the last chapter demonstrates. Much more than the United States, Western Europe has relied on cartels, pricing agreements, market-sharing arrangements and monopolies to limit and restrict competition. what has been true of labour has also been true of business. The strength of organised labour grew relative to that of business in the decades of full employment after the war, so that some trade unions were able to insist upon conditions for recruitment and particular qualifications for skill. In Britain, the folk memory of mass unemployment between the wars has been very slow to fade, perhaps because of the persistence of the class system, perhaps because of relatively low geographic mobility. Restrictive practices have often been adopted as a means of protecting jobs, which in the short run they may do. In some firms the workload during normal working hours has been limited so that workpeople have been able to work long hours of overtime as well. Overtime has become endemic in some industries and is quite often guaranteed.

Wages and Inflation

But trade union’s resistance to wage cuts during recessions, far from damaging industrial economies, has been an important stabilising factor. Wages and salaries constitute a very large part, usually about three fifths, of the national income. They are therefore the main element in domestic demand. Wage cuts, complemented by cuts in unemployment pay (the ‘dole’), helped to precipate the slump of the 1920s and 1930s. To quote Fritz Scharpf again:

Perhaps the most important [of the stabilizing factors] is the ‘downward stickiness’ of wage which are determined by collective bargaining. They have stabilised the income, and thus the demand, of the great majority of wage earners even in recession periods, and they have so far helped to avoid the vicious cycle of downward spiralling demand that caused the great depression. (Pp. 128-9).

Discussing the differences between trade union structure and membership in Britain and Germany, Williams states

The job of German trade unions is also eased by the amount of information on the state of the economy and of each individual company available to their members through the system of works councils. German workers know the effect that inflationary settlements will have on employment prospects and on prices because the facts are available to them. They also know when they are getting paid too little. This basis of consultation underpins West Germany’s bargaining system. In Britain, a heavy price is paid in suspicion and antagonism because so little information is revealed and so few companies consult their workers. (p. 131).

In other words, if you involve the workers in the management of their industries and economies, they will defend their own interests, of course, but in an informed and responsible manner. This is pretty much the exact opposite of what the Neoliberals, the CBI and the Tories have been claiming.

The argument that wages should not be cut, nor should unemployment benefit, because these actually stimulate the economy, whereas the money raised through the tax cuts given to the super-rich does nothing but lie in their bank accounts, has been time and again by economists and bloggers like the Angry Yorkshireman and Mike at Vox Political. Ha-Joon Chang makes the point that the tax cuts don’t work in his book, 23 Things They Don’t Tell You About Capitalism, in an entire chapter devoted to destroying the trickled-down argument. But such policies are popular, because they satisfy the greed and venomous contempt and fear the middle classes have for the poor.