Austerity: Human Costs of a Trans-Atlantic Plague

Following many warnings by economists, social scientists, and others about the disastrous human, economic and social costs of the fiscal austerity policies imposed on Greece, Spain, and Portugal, we now have scientific evidence. In April 2013, the health journal Lancet published a study that examines the health effects of austerity. The findings are dramatic: sky-rocketing suicide rates and outbreaks of infectious diseases such as HIV, Malaria, West-Nil or Dengue fever are becoming more common as a result of "state retrenchment". The situation is most dramatic in Greece where hospitals have difficulties to maintain minimum medical standards. Moreover, budget cuts have restricted access to health care and medication as many can no longer afford medical insurance. Suicides in Greece have risen by 40% in one year (2011). By contrast, the financial crisis has had no discernible effect on people's health in Iceland, a country that rejected austerity and instead invested in public services. The lead scientist of the study, London medical professor Martin McKee, accuses Europe's politicians to deny the dramatic health effects of their most recent rounds of austerity imposed on the Southern European periphery. In fact, the EU commission is obligated to examine the consequences of their policies on health, says McKee. So far, this has not been done.

Across the Atlantic, the situation is very similar. The ideological focus on fiscal austerity to reduce public debt in the US has resulted in sticky high unemployment rates, downward pressure on already low wages, reduced health care and retirement benefits, and a general retrenchment of social services. On both sides of the Atlantic, at the beginning of the 21st century ideology and money seem more important than human lives. Hello ?! Are we going back to the middle ages or has a rare cockroach zombie eaten people's brains ? What ever happened to inalienable human rights such as life, liberty, and the pursuit of happiness ?

It is, again, a woman's voice that attempts to insert some humanity and reason into this miserable state of affairs: on April 10, IMF Managing Director Christine Lagarde gave a most remarkable speech on the global growth outlook to (mostly) finance professionals at the Economic Club in New York city. Here are a few extracts from my notes:

"With over 200 million people out of work in 2013, job creation is an urgent priority....because a high level of employment is the best guarantee for a vibrant economy and a healthy society....the best way to create jobs is through growth, with the right mix of demand-side and supply-side policies....Governments / policymakers can deploy labor-market policies to spur job creation more directly while at the same time accepting fiscal policy sustainability: through education, vocational training, wage and childcare subsidies, lower taxes on labor, etc."....."In addition to growth and jobs, we need more equity and inclusion....A more balanced distibution of income leads to more sustained growth and economic stability. Inequality today is too high in too many countries....Equity also matters because of adjustment fatigue....Just as the pains of adjustment have to be shared, the gains of growth need to be shared as well....We should protect the people most affected by crises and make adjustment as fair as possible...by protecting basic social services, by ensuring progressivity in the tax system and by combating tax evasion." (source: Bloomberg videos)

I have just one question: why do IMF adjustment programs in Greece and elsewhere not reflect Madame Lagarde's views ?  As they used to say at Harvard: Don't just do the talk, walk the walk!