Global Health and the Global Economic Crisis

Chapter 33

Global Health and the Global Economic Crisis

Solomon R. Benatar, Stephen Gill and Isabella Bakker

Despite impressive scientific advances and massive economic growth over the past 60 years, disparities in wealth and health have persisted and, in many places, widened. As a result, the hope of achieving significantly improved health for a greater proportion of the world’s people—one of the most pressing problems of our time—has become an ever more distant prospect.^1–5 Our failure to make adequate advances in this direction is starkly illustrated by insufficient progress toward achieving the limited Millennium Development Goals for health in the poorest countries,⁶ the growing threat of infectious diseases associated with poverty,⁷ and the increasing burden of chronic diseases on lifestyle.⁸ All of these challenges, now exacerbated by the most severe global economic crisis since the 1930s, are likely to become even more urgent in the years ahead.^{9, 10}

We describe aspects of an increasingly unstable world and why the market-driven growth paradigm is insufficient to achieve improved global health. We then suggest a number of new ways of thinking that we believe should be adopted to improve global health.

An Unstable World

The economic crisis is a manifestation of a world made more unstable in large part because of socially unjust and excessive patterns of consumption that are resource depleting and wasteful. There is disjunction between two sets of factors: (1) rapid economic growth (according to World Bank statistics, the real-world annual income, measured in purchasing power parities, increased from $25.096 trillion in 1990 to $71.845 trillion in 2009)^11a and unprecedented advances in science, technology, and medical care; and (2) the ability to use these advances to improve the lives of more people globally. Moreover, the current global economic and debt crisis^11b has involved a flawed economic paradigm and policies (based since the 1970s on increasingly deregulated markets) that produced a catastrophe described as “the result of the combination of negligence, hubris and wrong economic theory.”¹² Fox,¹³ for example, has exploded the myth of the rational market. Many other economists—for example, Stiglitz¹⁴ and Krugman¹⁵—have also recognized what Galbraith,¹⁶ Gill,¹⁷ and others have long understood as the serious imperfections of the economic theories propagated and linked to justify the free market and present-day finance capitalism that have produced evidently disastrous results.

Modern advances in health care are also now increasingly driven by market forces.18–20 They have largely benefited only about 20% of the world’s population. In the 1990s, 89% of annual world expenditure on health care was spent on 16% of the world’s population, who bear 7% of the global burden of disease (in disability-adjusted life years).²¹ Annual per capita expenditure on health care ranges from more than $6,000 in the United States (17% of gross domestic product [GDP]) to less than $10 in the poorest countries in Africa (< 3% of GDP). Half the world’s population lives in countries that cannot afford annual per capita health expenditures of more than $15, and many people do not have access to even basic drugs. Between 51% and 60% of the world’s population (3.2–3.8 billion people) live in miserable conditions, below what has been defined as the “ethical poverty line” of living on $2.80 to $3.00 per person per day,²² benefiting little from progress in science and medicine.^{1, 23} Recent large public bailouts for private firms involving trillions of dollars have failed to stem massive job losses; at the same time, rising food prices have resulted in a further decline of living conditions for most of the world’s population.^24–27

Other manifestations of global instability, all in some way connected to excessive and wasteful consumption patterns, include the following: environmental degradation and global warming²⁸ (much of which results from energy-intensive production and distribution methods); emerging new infectious diseases that cause millions of premature deaths, with the significant possibility of future major pandemics of H1NI or H5N1 flu^{29, 30} (through closer contact with animals, in part as a result of intensive animal farming, which allows pathogens to cross species barriers); and an increasing global burden of disease from noncommunicable diseases,⁸ accidents and trauma,³¹ and pervasively adverse social conditions.^32–34

The Need for New Ways of Thinking

We need a new balance of values and new ways of thinking and acting. This new thinking must transcend national and institutional boundaries and recognize that, in a globalizing world, health and disease in the most privileged nations is closely linked to health and disease in impoverished countries.^{2, 5, 23, 34} Sustainable improvement in health and well-being is a necessity for all, and the value placed on health should permeate every area of social and economic activity.

Improved population health is achievable but requires a new critical paradigm of what it means for people to flourish. At a basic level, human flourishing could be defined as lives in which essential life needs are met, including a safe and nurturing childhood, adequate nourishment and accommodation, clean water, sewerage facilities, childhood vaccination, education, and safety from easily preventable everyday health, economic, and other social threats within a broadly originated framework of respect for human rights.³⁵

To facilitate escape from the current global impasse, in which less than one third of the world’s population flourishes amid conditions of relative affluence and more than two thirds do not have their essential needs met, we offer the hypothesis that achieving improved global health will be less dependent on new scientific discoveries or technological advances, or on economic growth alone (both of which are necessary but not sufficient), than on working toward achieving the greater social justice that must lie at the core of public health.³⁶ This work will entail economic redistribution as well as enhanced democratization of processes associated with economic decision-making and the means of reproducing caring social institutions. The latter include educational facilities, health care services, and social services that could enable new generations of children to achieve their potential. These social services constitute the bedrock of civilized societies and have facilitated massive economic growth and improvement in many lives after World War II. The recent, long-overdue focus by the World Health Organization on the social determinants of health⁶ is one of many evaluations supportive of our view.

The health of populations is shaped by systemic interaction between different forms and dimensions of power (such as those of states and constitutions), productive capacity (including markets), and powers that shape the ability effectively to sustain caring social services, such as education and health care, into the future. The persistence of the processes that undermine such institutions and public provisions, particularly through neoliberal economic policies and governance, tends to deepen the already extreme inequalities of income and wealth, and thus will likely further intensify current global health inequalities.^{5, 10, 37}

Arriving at the Current Position

Globalization has had many acknowledged beneficial effects,³⁸ including advances in knowledge, science, and technology; increased life expectancy for many; enhanced economic growth; greater freedom and prosperity for many; improvements in the speed and cost of communications and transportation; and popularization of the concept of human rights. Although only about 20% of the world’s population has benefited maximally from such progress, a lower incidence of child labor has been reported in countries that are more open to trade and receive greater amounts of foreign direct investment.³⁹ Market-oriented economic policies have also been linked to lower rates of infant mortality across the world.⁴⁰ In addition, new scientific discoveries (e.g., the human papillomavirus vaccine to prevent cervical cancer) offer much to improve health. However, many obstacles remain to ensuring availability of such new vaccines to those most at risk.⁴¹

The global political economy that has emerged over the past 30 to 40 years is increasingly governed by laws and regulations that are dominated by neoliberal economic ideas of unregulated market freedoms that suit transnational corporations and large investors. Since the 1980s, privatization, de-regulation, and liberalization have opened up world markets for corporations through policies related to the so-called “Washington Consensus” of Wall Street, the International Monetary Fund (IMF), the World Bank, and the US Treasury. The wider context is a free enterprise economic system dominated globally by the firms that control most large industries (e.g., food, pharmaceuticals, software). Whether it is in the form of World Bank structural adjustment policies or IMF stabilization, neoliberalism has become central to defining programs of political and economic reform and responses to the economic crises of ever-increasing severity since the late 1970s.⁴²

What the World Bank has called the “locking in” of neoliberal economic policies through laws, regulations, and institutional changes such as independent central banks has therefore resulted in private economic forces gaining greater weight over basic economic policies.⁴² For example, the independence of central banks from government interference or popular accountability has allowed financial capitalism to dictate monetary policies (boards of governors of central banks consist mainly of individuals representing financial interests) as well as many of the large bailouts of banks following the 2008 economic meltdown on Wall Street. Before the current financial collapse, central banks tended to pursue legally mandated low-inflation targets (even if this practice resulted in higher unemployment).17, 43 This innovation was coupled to fiscal restraint laws (e.g., to balance budgets), resulting in lower public expenditures on social and health provisions.

All of these policies were elements in the deepening of social inequality and the erosion of public health systems in recent years. More generally, neoliberal discourses of self-help and fiscal austerity underpin the argument that such public expenditures are not affordable—something the IMF emphasized in 2010, calling for 10 to 20 years of fiscal austerity to finance the huge public debts incurred in bailing out the big banks and auto firms.^{43, 44} More broadly, in a world of highly mobile capital, neoliberal policy must be perceived by the markets (investors) as credible—that is, making trade, fiscal, and monetary policies that favor business and thus inspire business confidence.

Nevertheless, at the heart of the recent financial crisis was not only a collapse in the credibility of regulation and government policy but, more fundamentally, a crisis of confidence of the trustworthiness and solvency of the big banks themselves. At a certain moment, fear and panic took over the markets, and private banks were unwilling to lend to each other or to other firms, causing a credit crunch. Such characteristics of poorly regulated finance capitalism help to explain why the crisis that began in 2008 was predictable. Indeed, some far-sighted political economists long argued that a collapse would ensue from too-rapid economic liberalization, excessive leveraging, and the use of poorly understood financial derivatives in the context of financial regulations that were effectively written by financial interests, providing little real oversight of banks and hedge funds.^{17, 45}

This free enterprise financial system is dominated by giant corporations on Wall Street and in London and, to a lesser extent, Tokyo, Frankfurt, and Paris. These interests, by controlling the financial markets and particularly the US Treasury and the US Federal Reserve System (particularly under the long stewardship of Alan Green-span, who is a self-confessed devotee of the libertarian philosopher Ayn Rand⁴⁶), succeeded in institutionalizing a self-regulating market system that allowed them to create new ways of making profits while taking excessive risks with other people’s money. These strategies were all justified by the so-called efficient markets hypothesis,¹³ which effectively asserts (with no theoretical or empirical evidence to substantiate it) that markets are best left to self-regulate since they have inbuilt incentives to spread risk and act with prudence. This combination of financial power and abstract theorizing proved to be a catastrophic admixture of ideology, interest, and recklessness.

Several insightful economists who have not been encumbered by flawed conventional economic theory have written extensively on such issues, and the US government’s inspector general for the Troubled Asset Relief Program has published at least two reports on this topic.⁴⁷ Samuelson drew attention to Greenspan’s flawed analysis of the financial crisis, for which Greenspan is at last “in part contrite.”⁴⁸

Thus, such economic governance frameworks are not simply the technical work of expert economists; they are deeply political, with enormous consequences for democracy and social justice. They have reshaped democratic and social choices at the local or national level (central banks are independent of local political pressures). The policy framework just outlined tends to militate against expenditures for public health or other caring institutions because it mandates policies to sustain confidence in the markets—confidence that the first priority of fiscal policy will be to repay public debts owed to bondholders as a consequence of financing the bailouts. The direct and indirect impact of policies that prioritize such private interests has been to widen disparities in health, access to health care, and life expectancy, within and between countries. This trend is likely to continue if neoliberal policies continue to dictate the fiscal response to financing the bailouts.1, 5, 23, 37

The political nature of such choices is therefore now much more obvious than in the past. Policies of “sound finance” designed to curb excessive market freedoms and consequent aberrations have been abandoned, and central banks have been given the independent status that allowed them to access public money for private financial bailouts.^{12, 43, 49} Corporations that engaged in unregulated investment and highly leveraged borrowing strategies, and that have long argued against state ownership of the means of production, now want their losses socialized or, when faced with complete financial ruin, their firms nationalized. Moreover, they claim that such interventions are required to restore the health of the market system.^{43, 49}

Failure of the Market-Driven Paradigm as a Means to Global Health

Global public policy driven by the ideology of neoliberalism over the past 30 to 40 years has had many adverse effects on health and health policy. These adverse effects are evident in the policies of the World Bank and IMF, institutions that have held the balance of power in much of the global South for several decades in formulating global health policy. Liberalization of economies, reduced subsidies for basic foods, and shifts in agricultural policy that promote export crops to the detriment of homegrown food production have resulted in the regulation of food prices via the global market—a development that has helped cause devastating malnutrition and starvation, especially in Africa. It is an indictment of the IMF and World Bank’s structural adjustment programs that they imposed reduced government expenditure on health care, education, and other social services and encouraged privatization, even within health care. Structural adjustment programs, growing debt repayments, cuts in aid budgets (especially by the United States), discrimination against African trade, increasing malnutrition, and the Cold War activities of the great powers have all played a significant part in sustaining high rates of infectious disease and in fanning the flames of the AIDS pandemic.^{2, 5, 34, 50}

There has been an accompanying transformation of social institutions that made it possible (through provision of health care, education, and other social support) for new generations of society to live good lives.^{2, 17, 51} Globally, there has been backtracking from the governing principles that characterized the post-1945 period, during which, to a greater or lesser degree, economics supported human development based on the power of governments to regulate banks and financial flows and to ensure universal access to basic social needs and a reasonable level of health care for the broader population.^{50, 52}