We present a book review by member Olivier Tonneau, posted on our former blog in November 2013.
In the worst of times
David Stuckler and Sanjay Basu. The Body Economic: Why Austerity Kills.
London: Allen Lane, 2013.
Austerity or stimulus? This is the issue discussed by David Stuckler and Sanjay Basu, who argue forcefully for the latter. Their opinion carries much weight; although one should not kneel before academic altars, it is worth emphasizing that one need not be a delusionary leftist to oppose austerity. Here you have it: David Stuckler is a Senior Research Leader at Oxford University who holds a Masters in Public Health from Yale and a PhD from Cambridge, and Sanjay Basu is Assistant Professor of Medicine and an epidemiologist at Stanford University who was a Rhodes Scholar at Oxford before he completed his MD and PhD at Yale. Having dropped names like a ton of bricks, I can, however, assure you that The Body Economic is an easy read whose rationale can be summed up very simply. I will do so by using the customary comparison between the economics of a nation and that of a household. Admittedly a rather worn-out analogy, but as it is often drawn by promoters of austerity it might be useful to turn things around for once.
Here's how the analogy goes. Imagine you are married, have three children and live decently with two incomes. Then your partner loses his job. You struggle to pay the bills and cannot make monthly mortgage payments. Perhaps you'll have no choice but to live in a caravan, save on health and heating expenses, cancel your youngest son's sports club subscription, take your eldest daughter out of high school and into zero-hour contract jobs. The future will look bleak: what if you become sick due to poor living conditions and are made redundant? How will you then support the family? What if your son, idle and bored, starts taking drugs? How will you pay for his rehab program? Surely not with the tiny and irregular income of your daughter who, without a degree, has little prospect of a stellar career. You will need to borrow a big sum of money merely to keep afloat, but without an income you'll fall prey to loan sharks and end up with much more to repay than what your mortgage repayments and utility bills originally amounted to.
This kind of tragic story is only too common. We can only hope you'll be lucky: let's say you have a 1/300 chance of getting in trouble. Yet the risk could be avoided with a better strategy. When your partner lost his job, you should have immediately borrowed a very large amount of money that would have covered your living expenses, mortgage repayments and paid for a training course for him; his new qualification would have led to a new job – perhaps a better one – and you could have slowly paid off the debt. Perhaps you would eventually look back upon your misfortune as an opportunity. For your household, this course of action is not an option: you are too old already to get in so much debt and banks do not trust your capacity to pay back. But if you were a state, you would not have any trouble. Your credit history goes back centuries and is pretty strong, and you are virtually immortal so there's no debt you cannot repay.
Thus, whereas households are often forced, in times of crisis, to inflict self-destructive austerity policies, states generally can and should act otherwise. Besides, if households have a 1/300 chance of getting in trouble, this means that in a nation, one household out of three hundred will get into trouble; it is in the state's interest to do everything it can to prevent this from happening, especially as prevention will ultimately cost less than reparation. Thus in times of crisis, wise states get in debt and invest in health, housing and education; foolish states implement austerity policies and face all sorts of disasters.
This is the simple reasoning underlying The Body Economic: as we say in France, mieux vaut prévenir que guérir ('better prevention than cure'). If it's that simple, you might ask, why work your way through the whole book? There are three reasons to do so. The first is that you might want to verify the validity of my analogy. Stuckler and Basu provide you with ample evidence by focusing on 'natural experiments': cases where two countries, confronted with the same crisis, chose different strategies, one going for austerity and the other for stimulus. The first natural experiment takes us back to the United States during the Great Depression and compares the fate of states who implemented Roosevelt's New Deal policies with that of states who chose austerity. The second experiment takes place after the crumbling of the Soviet bloc and compares the fate of Russia, where all social programs were dismantled in a rush to privatization, to that of Poland, where the welfare state was carefully maintained during a gradual transition to a market economy. In the third chapter, we move to Asia and assess the consequences of the 1997 economic collapse for South Korea, Thailand, Indonesia and Malaysia, the latter alone having resisted the IMF's call for austerity. The fourth and fifth chapters bring us back to Europe, first to Iceland (stimulus) then to Greece (austerity). Chapters 6, 7 and 8 study the importance of maintaining health, education and housing programs. In every case, the conclusion is the same: the damage of economic crises is only compounded by austerity, whereas stimulus enables countries to work their way through hardship, often coming out better off than they were.
The second reason why Stuckler and Basu's book is well worth reading is that it provides you with ample evidence of neoliberal insanity – did the IMF really ask Thailand to scrap its enormously successful AIDS-prevention programs? Indeed it did. Are the Tories really paying Atos £400 million to crack down on disability frauds whose annual cost is £2 million? Indeed they are. As you work your way through the wealth of data gathered by Stuckler and Basu, you'll easily discern a pattern – a pattern of chronic short-sightedness afflicting neoliberal technocrats who are incapable of estimating the real cost of their policies because they simply do not understand that social protection programmes (yes, the welfare state) fill essential economic functions. Social programs are, in their eyes, a form of charity; and charity is a luxury, therefore expendable – at all costs. I wonder how anyone who reads this book could dissent with Stuckler and Basu's conclusion that austerity 'is a socially constructed myth – a convenient belief among politicians taken advantage of by those who have a vested interest in shrinking the role of the state, in privatizing social welfare systems for personal gain. It does great harm – punishing the most vulnerable, rather than those who caused this recession.'
This leads me to the third reason to read this book. Since I am a fervent supporter of the welfare state, you may say that Stuckler and Basu were preaching to the choir. Yet they have impressed upon me the sense of the delicacy and frailty of what they call the body economic and helped me understand that social programmes have effects that extend far beyond the goals which they were designed to achieve. Why, for instance, was there an epidemic of West Nile Virus in Bakersfield, California, in 2007? Because the ponds and pools of foreclosed homes had been left to moulder. You will find plenty of such unexpected consequences, presented via specific cases of people whom Stuckler and Basu encountered during their research. Heartbreaking, infuriating cases that serve both a demonstrative and a rhetorical function, and impress upon us the urgency of Stuckler and Basu's final words:
When we tell our children about the Great Recession, they will judge us not by growth rates or by deficit reductions. They will judge us by how well we took care of society's most vulnerable, and whether we chose to address our community's most basic health needs: healthcare, housing, and jobs.
The ultimate source of any society's wealth is its people. Investing in their health is a wise choice in the best of times, and an urgent necessity in the worst of times.