Tag Archives: International Monetary Fund

Against Covid-19 fetishism, and other musings

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Herewith a few equity- and policy-oriented musings about the latest state of the pandemic world.

1.  Media, and many researchers who should know better, seem obsessed with the number of deaths from Covid-19, or associated with Covid-19.  Good reasons exist to want to know this over the short term, for purposes of tracking the spread of the virus, but apart from the fact that in most countries the current chaos makes it impossible accurately to determine this number, it is largely irrelevant in terms of the overall health impacts of the pandemic.

The most basic indicator that matters is the all-cause mortality rate (age-adjusted or not, and both figures should be presented), and the inequalities in this indicator amongst various age, class, gender, race/ethnicity and regional demographics. Over time, all-cause mortality rates will reflect not only the short-term health system dislocations and dysfunctions associated with the pandemic, but also the longer-term impacts on social determinants of health of the depression that will follow the lockdown. In a few years, those of us still alive will be able to compare the effectiveness of various national responses … and to restate a point it is all-cause mortality, and not the number of deaths directly attributable to Covid-19 or among people tested positive, that matters. Dead is dead, whatever the cause.

2.  In the UK, I continue to be baffled by the utter lack of comprehension among people professing a concern for equity of what economic downturns of the magnitude now apparently envisioned by Treasury – and of course these anticipations are all dependent on the assumed length of the lockdown, the nature of the exit strategy, and the economy’s subsequent response – will mean for everyday life and for the economic substrates of health inequalities.  The cynical me suspects that most people in a position to prognosticate with anyone paying attention have gardens and can comfortably work from home, unlike much of the rest of the population.

Let me suggest just one example of probable impacts:

Concern about the fate of high street commerce has long been unmatched by meaningful policy response.  Mr. and Mrs. Range Rover, who matter most in political terms, usually shop online or in the suburbs.   Post-pandemic, for hard financial reasons, it is likely that local authorities will simply cease providing services to low-occupancy commercial high streets, and utilities will be released from whatever obligations they have to provide services in those areas.  There will be few users, and fewer still who are able to pay their bills or council taxes. 

A fantasy?  Not at all.  A variant of this policy was partially adopted as “planned shrinkage” in New York City in the 1980s, and much more recently in post-bankruptcy Detroit.  There will be no-go high street wastelands of abandonment, at least until some far distant future when they will become attractive for reinvestment (beyond the lifetimes of many of us).

Alternatives can be imagined, in abundance (and will be the topic of a future post), but it is hard to think that any UK government will pursue them in the near future, especially as the country’s post-pandemic economic policy may well be managed jointly by the International Monetary Fund, as gatekeeper, and China, as the only external actor with the resources necessary to provide direct investment on the scale necessary.

3.  Even if the UK’s post-Brexit departure from the single market and customs union is delayed, as it should be, the full scope of the dislocations will become clear at the start of next winter, when it becomes clear how many Britons simply cannot afford to heat their homes.  Watch the all-cause mortality rate carefully as that happens. 

This post was updated on 15 April.

Revelation! The International Monetary Fund discovers tax avoidance and capital flight

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Capital flight – in which actors with liquid assets shift them out of their country in order to earn higher returns, avoid currency depreciation and escape regulation – has been recognised as an important constraint on development prospects for decades.[1]  Before I moved from Canada to the UK, I was often dismissed and sometimes ridiculed by colleagues (millionaire physicians in particular, but not only they) for suggesting that discussions of ‘global health governance’ must not ignore capital flight and the mechanisms that facilitate it, for example by creating opportunities for tax avoidance or evasion.

Recent developments have underscored the issue’s importance.  Notably, a 2014 Chatham House report on how to finance the transition to universal health coverage that has now been endorsed as a target for the United Nations’ Sustainable Development Goals highlighted ‘[e]nsuring good tax compliance by taking steps to reduce tax avoidance and evasion, particularly by high net worth individuals, high-profit companies and transnationals’. And the September, 2019 issue of the International Monetary Fund’s quarterly Finance & Development focuses on tax avoidance, under the rubric ‘Hidden corners of the global economy’.

The magnitudes involved are staggering.  In the lead article, the acting managing director of the IMF cites an estimate of US$ 7 trillion (yes, trillion) as the amount of private wealth hidden in tax havens.  The annual tax revenue losses to governments, amounting to US$ 1 trillion on one estimate (or roughly 1.5 times the United States’ bloated military budget) are just a part of the overall loss related to such mechanisms as mispricing in cross-border trade within global production networks dominated by transnational corporations, and purchase of nationality by ultra-rich individuals (see Figure 1, a screenshot from a consulting firm that describes itself as ‘The Leader in Residence and Citizenship Planning’).  The latter process at least is entirely legal, indeed entrenched in many national ‘golden visa’ policies, and the legalities of transfer pricing remain the topic of extensive and inconclusive litigation using the limited options that are now available.

Figure 1

The IMF’s belated discovery of tax avoidance, and its engagement with leading researchers like Nicholas Shaxson, is therefore welcome.  Perhaps, to quote Tracy Chapman, ‘finally the tables are starting to turn’, even though this possibility requires temporary suspension of disbelief with regard to the IMF’s historic role in expanding global predatory capitalism under US leadership.  In an alternative universe, IMF conditionalities would for decades have included performance requirements related to national policies aimed at reducing tax avoidance and capital flight.

Meanwhile, public health protagonists working within national contexts where it is safe to do so (a shrinking universe) must foreground how a global economic order that enables ultra-wealthy individuals and transnational corporations to avoid tax liabilities limits the ability of well-intentioned national and sub-national governments (yes, there still are some) to reduce health inequalities, whether directly through equitable provision of health services or indirectly through poverty reduction, addressing place-related dangers, and other strategies.

Public finance is a global health issue.  This message must be communicated as widely and forcefully as possible. I am glad to provide more extensive reference lists to those interested in advancing this understanding. .

[1] For an early discussion in the Latin American context, see D. Lessard and J. Williamson, eds., Capital Flight and Third World Debt (Washington, DC: Institute for International Economics, 1987).  For a summary of later work by the leaders in research on capital flight from sub-Saharan Africa, see Boyce and Ndikumana (2012).