Tag Archives: economic collapse

Hating to have been right

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In the slightly less frantic period of university activity that precedes my pending retirement and actually offers time to think, I am prompted to look back at some of the predictions I made about the pandemic and the UK’s social and economic future well over a year ago – notably, that post-pandemic economic contraction would mean that ‘the United Kingdom is over as a desirable place to live and work, for a very long time, except for those living in gated communities or behind castle walls’.  Although the contraction does not (yet) approximate the ‘post-Soviet style economic and health collapse’ that I anticipated in January 2021, it was reported on 22 August that the UK economy contracted by 11 percent in 2020 – the largest year-on-year decline in GDP since 1709.  Please note that this reflects only the first year of the pandemic, and neither the short-lived post-lockdown recovery nor the cataclysmic geopolitical events of 2022.  (Proponents of ‘degrowth’ might nevertheless reflect on how well 2020 turned out, and for whom.)

Ongoing uncertainties and supply chain disruptions associated with the pandemic have now been compounded by the inflationary effects of Russia’s invasion of Ukraine; its weaponisation of natural gas trade and, at least temporarily, further disruption of agricultural exports; and a domestic political vacuum that sees the probable next prime minister characterised (accurately) as on ‘holiday from reality’ by a senior Cabinet colleague.  Average real (inflation adjusted) earnings in the second quarter of 2022 fell at a record rate, whilst one forecast was that under existing institutional arrangements, the ‘capped’ amount a British household will pay for energy could rise to more than £6,000 by April 2023, from less than a third of that in August 2022.   This will be a minor inconvenience for Mr. and Mrs. Range Rover, but on one estimate – based on a lower assumed energy price than what is in the latest forecasts at this writing – 45 million people will experience ‘fuel poverty’ on a standard definition.

These impacts are, of course, attributable not only to the pandemic but also to geopolitics, and it is plausible to argue that the impacts I’ve described would be much less severe had the Russian invasion not taken place.  But the world is as it is, not as we might wish it to be.  Further, I was wrong – I am thoroughly delighted to say – about some things, especially the prospects for what turned out to be a relatively successful UK vaccine rollout.  Nevertheless, according to The Economist’s (paywalled) tracking of excess deaths from all causes – the most meaningful measure of successful pandemic response – Britain’s figure of 253 excess deaths per 100,000 people between the start of the pandemic and 23 August is comparable to Chile, Guatemala and Lebanon; almost twice as high as Sweden; and roughly three times as high as Norway, Denmark and Canada.  So the glass is definitely only half full, and the British figure may well deteriorate further against the background of an already fragile and under-resourced health system; a social safety net stretched to the breaking point; and a political leadership seemingly bent on emulating the captain of the Titanic in its response to the economic emergency.  Those castle walls will look awfully attractive to those for whom they are available.

New Year, New Lockdown: ‘The Great Deception’

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Predictably, the New Year started in the United Kingdom with new lockdowns.  Given the negligent and cavalier stance of the Conservative central government towards basic public health principles since the start of the pandemic, and the consequent peril to the National Health Service, this was inevitable, although one may argue with some of the specifics.  It is important to remember, though, that both the parlous state of the NHS and the neglect and defunding of public health infrastructure are consequences of a homicidal decade of Conservative austerity, correctly described in 2017 by the editor of The Lancet, Richard Horton, as ‘a political choice that deepens the already open and bloody wounds of the poor and precarious’.     

One of the knock-on effects is that we are now living in a police state – so far, a non-violent one, but violence is not a necessary element of the definition.  Hyperbole, you say?  Well, what else would you call a polity in which the decision about what constitutes a ‘reasonable excuse’ for leaving home is decided, in the first instance, by police, who will be defended by Cabinet ministers?   I wish politicians and self-styled progressive colleagues alike would stop dissembling on this point.  They might well defend the situation as necessary, but they should stop lying about its nature.  Presumably some of these fines and arrests will be successfully contested by those with the time and money to do so, should government eventually permit courts to resume routine operation, which is far from certain.  

Speaking of lies, porkies* of Trumpian proportions have been emanating from central government.  We are told that, if we obey the rules and all goes well with vaccination, restrictions might be eased in ‘tulip season’ (May, in these parts) or ‘spring’ (technically, before 21 June).  If any reader believes that, then I can offer a really good deal on some oceanfront property in the Canadian province of Saskatchewan.  (Spoiler alert: there isn’t any.)  Given the government’s record of destroying any public health initiative it touches, the UK will be doing well to be out of the worst of lockdown by September.  In fact, more severe restrictions are threatened.  As John Harris observed in an important Guardian commentary: ‘The lack of alarm about these moves is remarkable’.

Disturbing manifestations of burnout can be anticipated by the end of a summer without holidays (I quote from the government guidance: ‘holidays in the UK and abroad are not allowed’).  Some of us would in theory have the attractive option of sitting on the local seafront and reading once the weather warms up … except that under current guidance this would not count as exercise, one of the ‘reasonable excuses’ to leave home, so would be a crime.  Such constraints weigh most heavily, of course, on those without gardens of their own or with caring responsibilities.  The incidence of deaths of despair is likely to soar, as is the number of employers using depression and anxiety as a pretext for forced redundancies.

All this means that the chances of a post-Soviet style economic and health collapse in the UK, lasting for a generation or longer, are considerably greater than they were when I first raised the possibility last summer.  It could be, of course, that vaccination will proceed more quickly and effectively than expected (pigs might fly, too) or that some other remarkable advance in prevention will be found.  Unfortunately, it is much more likely that the United Kingdom is over as a desirable place to live and work, for a very long time, except for those living in gated communities or behind castle walls. 

The ways in which the pandemic is magnifying inequality – on which I will expand in a subsequent posting, based on material from the postgraduate course in Advanced Social Determinants of Health that I lead – continue to be given limited attention.  Most of the ‘experts’ calling for even stricter lockdowns probably have gardens of their own, job security, and substantial savings, unlike many other Britons; they have generally been silent on inequality issues.  Still less often have they taken up Horton’s pre-pandemic injunction that: ‘The task of health professionals is to resist and to oppose the egregious economics of our times’.  One wishes that members of the government’s Scientific Advisory Group on Emergencies had to disclose their households’ incomes and net worth, along with their professorial titles and British Empire honours, as part of their declaration of interests.

Here is a thought experiment, keeping in mind two propositions.  First, people working in front-line occupations (think essential retail like supermarkets, delivery, driving those buses that continue to operate, Amazon warehouses, meat packing, care homes) cannot work from home, and especially if on zero-hours contracts or without union protection cannot afford to self-isolate after a positive test or if symptomatic.  (The jobs of many others, working in the sector broadly described as hospitality, have vanished under lockdown, possibly never to return.)  Second, as of 25 September almost nine out of ten deaths from Covid-19 involved people 65 or older (more recent figures are maddeningly hard to find on official web sites).  Most of these represented an actuarial boon for the UK treasury, no longer paying state pension, and many for defined-contribution pension plans.   

Now, if you wanted to design a pandemic response that pretended good intentions whilst concealing a subtextual agenda of culling the working class (potential claimants of state benefits, after all, and therefore intrinsically suspect for Conservatives) and the elderly, the current UK response is what it would look like.  The UK is hardly unique in this regard, but along with Canada and its charnel house care homes and even more calamitous vaccine rollout it is an especially egregious case. 

The title of this post refers to what I consider the greatest song by Irish troubadour Van Morrison, ‘The Great Deception’.  Part of the refrain goes like this:

‘I can’t stand it / Can’t stand it nohow / Livin’ in this / World of lies’.

Indeed.

* For those outside the UK: short for porky pies, rhyming slang for lies.

Realism versus Monbiot: Thoughts on possible worlds of post-pandemic reconstruction

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George Monbiot is only one of many commentators who have argued the need for a post-pandemic programme of economic reconstruction that will address environmental concerns as well as the imperative of restoring and securing the livelihoods of literally hundreds of millions of people. The importance of this latter imperative cannot be overstated. In the US alone, unemployment by the end of April quadrupled to 14.7 percent, with 20.5 million jobs lost.  In the UK, the Bank of England has warned of a doubling of unemployment to nine percent and a shrinkage of the economy’s overall output to a 300-year low.   The UK unemployment figures are less horrific than they otherwise would be because of a massive debt-financed programme of wage and salary compensation that the Chancellor of the Exchequer has correctly characterised as unsustainable. 

Against this background, Monbiot (and I am not picking on him here; he is rather the most articulate and best informed proponent of this perspective, and therefore the most difficult target) argues that ‘[g]overnments should provide financial support to company workers while refashioning the economy to provide new jobs’ outside the automobile, fossil fuel and airline industries.  It is now a commonplace that after the financial crisis of 2008, governments bailed out many of the financial institutions that had caused the crisis – that is, their shareholders, managers and workers – rather than those who bore the worst consequences.  Monbiot argues that: ‘This is our second great chance to do things differently’.  But with government debt and expenditure levels relative to GDP already approaching twentieth-century wartime levels, just to finance short-term remediation, the unavoidable question is:  do things differently with what? And where will the investment necessary for such new jobs, and the financing needed to support workers’ transition to them, come from?

It is nice to envision, as a team of luminaries including Nobel laureate economist Joseph Stiglitz and climate economics authority Sir Nicholas Stern has recently argued based on an expert survey, that post-pandemic reconstruction can contribute to reducing climate impacts through investment  in ‘clean physical infrastructure, building efficiency retrofits, investment in education and training, natural capital investment, and clean R&D’, whatever that is.  The authors do not explain where the money will come from, in a world where the estimated US$2.5 trillion annual investment needed to meet the Sustainable Development Goals before the pandemic was nowhere in sight.

It is possible, in theory, to envision mobilising the needed resources by way of income and wealth tax rates that were prevalent after the Second World War, responding to wartime government debt and expenditure levels.  Many of these are now probably infeasible because of the concentration of ultra-wealth in financial instruments and tax haven real estate, and because of possibilities for capital flight that can best be limited through transnational cooperation in a world where a corporate-financed US Congressional candidate has claimed that ‘[f]reedom and democracy are best secured when banking secrecy and tax havens exist’.

If the ultra-rich are probably beyond the reach of national public policy, then the menu of policy options shrinks considerably.  When many dividends have already been cancelled, whose income does Monbiot propose to reduce, whose assets to tax or seize, and how?  What happens to firms that cancel dividend payouts when investors flee their shares, making it impossible for them to raise new capital in response to lockdown-created shortfalls?  How can green jobs be created by seizing foreign oligarchs’ London property holdings, their financial assets having long ago been safely shifted elsewhere?  How many of the Russell Group universities’ 508 senior staff who were paid more than the prime minister in 2018-19 will agree to salary cuts or marginal tax rate increases for the greater good?  Will their response be representative of their broader posh demographic?  Will clinicians who own second homes be content with strongly progressive taxation of their increased value over the years?  What are the legalities of much-needed retrospective wealth taxation?

In short: How are these dreams to be paid for? 

These are not rhetorical questions, and they should be the starting point for conversations that substitute serious consideration of political economy for cheerleading. Even in high-income countries, the post-pandemic menu of policy options is likely to be circumscribed by the International Monetary Fund’s role as a gatekeeper to financial markets – a role that low- and middle-income countries (LMICs) have experienced with often bitter consequences over the past decades, with the impacts compounded by capital flight.  Given the dire situation of LMICs, what justification can the high-income world offer to the world’s majority outside its borders for not taking advantage of fossil fuel prices that have sunk to the pre-1973 levels that enabled today’s rich to get that way, unless its development assistance agencies and investors are willing to increase their commitments by at least an order of magnitude?   Such conversations may have begun, but I am not hearing them. 

From tragedy to farce

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The Telegraph, whose coverage of the coronavirus pandemic has been consistently excellent, reports today (21 April) that UK firms are shipping millions of pieces of personal protective equipment (PPE) to Europe, while frontline NHS personnel do without; UK firms cannot get a reply to their offers of supplies; individual hospitals are ‘sidestepping the government’s procurement process’ (thank heavens); and central government longingly awaits imports from Turkey.

If accurate, the report confirms that the UK’s response to the pandemic has descended past tragedy into homicidal farce.  Sadly, having now observed British universities for seven years, I can understand what’s probably going on within the similar bureaucracy of NHS procurement: quality is a byproduct, although it may be achieved (and in universities, as on the NHS frontlines, it often is); the real concern is ticking boxes, Following Procedures and not annoying superiors.  Those managing the process have little stake in the outcome.

With a brief hiatus after the initial shock of panic buying and lockdown, within days the shelves at Tesco and Sainsburys were filling up again: these and other companies, unlike the NHS, have experience with doing logistics on the fly.  As hard as it is for a committed social democrat to say this, it is hard to avoid the conclusion that turning PPE procurement over to private sector logistics contractors, with RAF aircraft at their disposal if necessary, would have produced a superior outcome and saved lives.*  The government will have to try this route if it is to have any hope of protecting professionals and the public as a step towards a lockdown exit strategy, before the economy collapses beyond hope of repair. 

And on that note Prof. Carl Heneghan of Oxford, one of British medicine’s most conspicuous overachievers, was quoted yesterday as having told BBC Radio 4 that ‘the damaging effect now of lockdown is going to outweigh the damaging effect of coronavirus’.  Indeed, the social science tells us precisely that.  The question now is who will listen.

* Update: The Times reported on 22 April, unfortunately behind a paywall, that the NHS has in fact simplified its PPE supply chain to involve both the armed forces ‘and Clipper Logistics, a private contractor’, but that the military are ‘appalled’ by continuing inability to procure PPE and deliver it where it is needed. Clearly managers cannot get even the simplified logistics right … the fatal farce continues.

No exit? The United Kingdom’s probable Russian Future

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As many governments are announcing strategies for ending lockdowns, we have the curious situation in which the leader of the Labour Party and the Adam Smith Institute agree that the UK government needs to set out such a strategy, but the government refuses to do so.  It says only that five tests must first be met, but gives no evidence of being able to meet any one of them.

This is dangerously irresponsible, and is likely to have long-term negative consequences for public health and health inequalities – consequences that most public health researchers and practitioners seem determined to ignore.  Look ahead, for example, to next January when new border controls (the UK imports 30 percent of its food from the European Union) create food shortages whilst economic collapse worsens fuel poverty that was already a substantial public health issue before the pandemic.

In the absence of a clear, credible and rigorously implemented exit strategy, the future may well resemble the situation in Russia after the collapse of the former Soviet Union.  The economy contracted by close to 50 percent, existing social provision mechanisms and large portions of the health care system crumbled, and life expectancy – especially for men, who now are hit harder by the coronavirus – plunged by several years.  Conventional wisdom attributes a substantial part of this transition to alcohol consumption, but from a social determinants of health perspective this is explanandum rather than explanans: that is, it demands explanation rather than providing one.  Twenty-five years on, Russian life expectancy still did not reflect the country’s economic recovery.  That recovery was accompanied by rising economic inequality, massive capital flight, and the emergence of a new stratum of politically connected billionaire oligarchs.

All this could be avoided, but there is no sign that either the UK government or the public health community are even taking these risks seriously. 

Additional sources on the Russian experience: 

Field MG and Twigg JL, eds. Russia’s Torn Safety Nets: Health and Social Welfare during the Transition. New York: St. Martin’s Press; 2000.

Field MG, Kotz DM, Bukhman G. Neoliberal Economic Policy, “State Desertion,” and the Russian Health Crisis. In: Kim JY, Millen JV, Irwin A, Gershman J, eds. Dying for Growth: Global Inequality and the Health of the Poor. Monroe, Maine: Common Courage Press; 2000: pp. 155-73.