Austerity, the homicidal present, and the probable Russian future

On 18 June, I presented a webinar with this deliberately provocative title as the inaugural event in Fuse’s Covid-19 seminar series.  I think the provocation is fully justified by the most recent summaries of the UK’s failed response to the pandemic, notably from The Economist, the Oxford Research Group and Reuters.  (A superb one from The New York Times unfortunately appears to be behind a paywall.) 

You can find an archived recording of the presentation here.  My particular focus, as in an earlier posting to this blog (in which I pointed out that the Adam Smith Institute and the leader of the Labour Party were agreed on the importance of a coherent post-lockdown economic strategy), was on what can be learned from the experience of Russia in the generation since the implosion of the Soviet Union about the possible health and health equity consequences of drastic economic collapse. 

Fuse have kindly collected the questions submitted by audience members, not all of which could be addressed in the available time, and I’ve provided brief answers in italics below, under several topic headings.

(This post was updated on 30 June to add a reference to the excellent Reuters report on the UK’s coronavirus response.)

Economic inequalities and uncertainties

Just an observation- what to do about inequality is known, what we lack is the political will to act.

On the other hand… I think we have a generation who will no longer stand for inequalities and injustice. In the words of the late Whitney- I believe the children are our future…

I am also concerned about this issue being compounded by the uncertainty of Brexit when the economy was already in jeopardy pre-Covid 19

A perfect storm – austerity, Covid and Brexit

Agreed that much of what to do about inequality is known … as a small example, researchers at the University of Warwick recently showed that just requiring everyone earning more than £100,000 a year to pay an alternative minimum income tax rate of 35 percent would raise around £11 billion per year, without changing the ‘headline’ tax rate.  Raising the rate on high-income earners would further increase fiscal capacity, as would such measures as a one-off wealth tax of the kind proposed by Thomas Piketty as a way of paying off Europe’s rising debts after the 2008 financial crisis … and, of course, curbing tax avoidance by transnational corporations.

Agreed as well about the added uncertainties associated with Brexit.  For example, what happens to the economy of the North-East if the Nissan plant in Sunderland cannot remain viable?  The one bright spot may be what could be done, but probably won’t be, in terms of national economic redevelopment once EU rules on state aid no longer apply.

What we need to do is convince those in power that the health of the poor actually has implications for their wealth and wellbeing.

Ah, but does it?  COVID-19 would appear to prove the point, but consider how much easier it has been for Mr. and Mrs. Range Rover with a house, a garden, high-speed broadband and professional occupations to work from home and reduce exposure risk … meanwhile, the poor and marginalised in service sector occupations that require in-person work and presonal contact are obviously unable to work from home, whilst in many cases more vulnerable to the various comorbidities that appear to increase the severity of infection.

A Basic Universal Income … a ‘healthy response’ to economic and social sustainability?   

Maybe, if it is not seen as a substitute for investment in in-kind social provision (e.g. social housing, public transport, public health programming).  If used as a substitute, a Basic Universal Income could function as a subsidy for private landlords and dodgy second-hand car dealers, with recipients acting as the intermediaries.  I believe a better response is a basic living income floor, delivered to those eligible by way of a refundable tax credit. 

Do we have economic evidence to argue the case for tackling inequality? For example if we introduced a Basic Universal Income does this have a cost benefit analysis that could convince the rich that it is a good idea?

Here, the answer is an emphatic yes – as the OECD, for example, pointed out in 2015 in a report called In It Together: Why Less Inequality Benefits All.  Researchers at the International Monetary Fund have made a similar point about the need for inclusive growth.  The political problem, as economist Branko Milanovic has shown, is that ‘the rich’ may have much more to gain from promoting policies that redistribute income upward, of the kind we have seen in the UK post-2010, than from promoting economy-wide growth.  Building coalitions around the idea of inclusive growth will be absolutely essential if the pandemic is not to have the effect of ratcheting up inequality.

How many gold-plated Lear jets can one have?

Can’t speak to private aircraft, which is not a market in which I window-shop, but readers who love the sea and want to get really frustrated may want to check out the 200 largest yachts in the world.

Rebuilding economy and society: ‘Building back better’

The areas hardest hit economically seem to be in the North, Midlands, coastal areas etc.  Do you have any insights on the impact of governance structures on preparation for and response to the pandemic?  Do countries with more genuinely devolved powers respond better?

A very good question; I’m sure PhD dissertations will be written in the years to come on precisely that topic. 

I think we can only depend upon the local communities. Take Grenfell: Government stood back, community rushed in to support.

The third sector have traditionally always stepped in when the statutory sectors have cut back support/resources.  I’m interested to know what it is that enables the third sector to do this and what are the barriers that prevent the government.

I would agree that a communitarian approach is key. Hoping to appeal to the conscience of the rich seems wasted energy. For those of us in the academy could we try to make the case to our HE [higher education] institutions that working with charities, mutual aid groups and the third sector is part of our civic duty? There are groups, such as APLE and ATD Fourth World, pushing and campaigning hard against the worst effects of inequality.

What does the best response to avoid the potential Russian pitfalls more specifically look like at a local level?

Surely we created a North of Tyne Combined Authority and Northern Powerhouse to take control of our assets and our future. 

Again, all important points.  There are at least two different issues here: (a) local control over priorities for building back, which is essential, and (b) local resources for building back, which are hopelessly inadequate thanks in part to the fiscal evisceration of local government under post-2010 austerity. 

Local governments and entities like NTCA simply did not have the revenue streams or revenue-raising capabilities they needed even before the pandemic, as I pointed out in the presentation. 

I am convinced that the most likely approach to succeed at the national level is a national development bank, with a multi-billion pound initial capitalisation, empowered to lend on concessional (nowadays,  zero-interest) terms and offer direct grants to private businesses and, especially, local authorities for green rebuilding projects, under a streamlined planning process.  (Such rebuilding in war-ravaged Europe was, in fact, the original mission of the World Bank.)  Think what such an institution could achieve with the resources that would otherwise have been committed to HS2 and the road infrastructure necessitated by the third Heathrow runway …

At the international level, a remarkable pre-pandemic blueprint for a global New Deal was produced in 2017 by the United Nations Conference on Trade and Development.  Good ideas are not thin on the ground.

Age and ageing

How do we challenge the ‘othering’ of the elderly and those with pre-existing health conditions? There seems to be a tacit agreement that this is an expendable group.

Do you think ageing populations and care homes being in the spotlight during the pandemic will change how our society sees ageing?

Yes please to an ageing and Covid webinar!

Why have we [collectively] allowed the crisis in the care homes to accumulate over the past few decades?

There’s a cultural ‘groupthink’ that only other people grow old and get ill – ageing is ‘nothing to do with us’. How can we influence people to make the connection to the fact that it’s their own future care that’s in jeopardy?

All excellent points, and it is hard to avoid the conclusion that the elderly have been regarded as expendable, whether infected in care homes (and this has been a scandal throughout most of the high-income world) or effectively, in some countries like the UK, placed under house arrest.  In Canada’s two largest provinces, Ontario and Québec, no one familiar with the long-term care sector’s decades of underfunding, patchwork public/private provision, casualisation of personal support workers and under-regulation was surprised when some facilities turned into charnel houses.  Will this change?  I am sceptical, although encouraged by the creative response of organisations like the International Longevity Centre here in the UK. 

Fighting back, building ahead

How can we ensure that the public health community don’t shy away from the inherently political nature of inequality and its impacts?

How can we come together as a PH community – and bring about change in a meaningful impactful way without falling into a purely political debate which is a distraction from the key debate?

Public health is everyone’s business it will take all sectors working together.

Good questions, although I can’t agree that ‘purely political’ debates are necessarily a distraction.  Choices about who gets how much of a society’s resources, and on what terms, are at the core of politics, and public health risks irrelevance by ignoring them. 

Are we hindered because the Public Health community does not have a collective voice? This completely reduces our influence in the system.

I think the fact that we separate health from public health is part of this problem.  All health is public health. It is a sleight of hand to suggest otherwise.

I’m not sure that the public health community lacks a collective voice.  It has, in the UK, both the Faculty of Public Health and the Royal Society for Public Health.  The problem seems to me rather that highly accomplished public health professionals have been deeply divided about such issues as the unequal distribution of health damage and long-term economic risk associated with the lockdown … which has meant that the political executive can cherry-pick the ‘science’ it wants.  COVID-19 is hardly unique in this respect!  But in the course of spending far too much time reading media coverage of the pandemic, I’ve been struck by the extent to which The Telegraph ‘got’ the issue of unequal damage from lockdown, and The Guardian didn’t. 

I have a question following on from above – what do you see as the key points and forms of resistance to this?  Especially given the positions of many governments, not least in the UK.

I’m very concerned that these stark inequalities are fuelling reactionary far right wing populism / nationalism / patriotism – and the current government are happy to let this narrative run. Any ideas of how this can be challenged?

I wish I had better answers; hopefully the important dialogue that Fuse has initiated will contribute to developing them, as will a revival of critical thinking in UK universities.  As a political scientist, I have to observe that one of the undesirable characteristics of Westminster-style parliamentary systems is that a government with a legislative majority is so impermeable that it functions as an elective monarchy, in this case with a term of office that runs until the end of 2024. 

What can universities contribute to the resistance of this future in terms of our teaching?

Education has been commodified and is not about transformation. We need to address who can access education and what is provided when they get there … thinking Pedagogy of the Oppressed.

These are of course critically important questions, about which (in particular) Stefan Collini and Lawrence Busch have written brilliantly.  More recently another Canadian (like myself), retired legal scholar Philip Slayton, had this to say:

‘A curious and well-informed mind is a free mind, and a person with a free mind is a free person; creating this free person is what education, particularly postsecondary education, is meant to do. Universities need to reject a corporate consumer-driven model; a student is not a “client.” Universities must eschew misguided vocationalism, emphasize the development of critical thinking – in particular, the ability to distinguish between a good argument and a bad argument – and recognize that society needs dreamers at least as much as technicians. They need a fee structure that makes postsecondary education available to all without career-distorting long-term debt. And they need to welcome the expression of all views, even extreme ones.’

Public finance and public health

I have argued for many years that public finance is a public health issue.  Against the odds, this view appears to be gaining credence.  The Disease Control Priorities Project is a massive effort to identify the most ‘cost-effective’ options for improving health, funded by the Bill and Melinda Gates Foundation and organised by the World Bank.  The authors of a summary of its nine volumes of recommendations argued that ‘[i]n all likelihood, the finance ministry is the most important ministry (after health) for improving population health’.  Their argument related mainly to the options for taxing such health-destructive commodities as sugary drinks, while reducing subsidies on fossil fuels.  These are all laudable and important objectives, but we must go further.  Finance ministries are the most important ministries for improving population health – first, because they determine the budgets available to health ministries; second, because their policies determine the capacity of governments to meet health-related economic and social policy objectives (through taxation) and the distribution of the benefits of those policies (through their expenditure priorities).

In the United Kingdom, since 2010 we have witnessed an especially striking illustration of this point.  Tax and benefit policy changes have substantially reduced the incomes of those households near the bottom of the economic distribution, with minimal impact on those near the top.  Food bank use has increased sharply, and this is almost certainly only the tip of the health impact iceberg; the most deprived local authorities, which derive much of their income from central government, have been hit hardest by budget cuts and are closing libraries and preventive services like smoking cessation, even as the National Health Service simultaneously cuts back on stop-smoking prescriptions.  Indeed, the NHS as a whole is in a state of continued crisis because of government’s unwillingness to provide adequate funding from general tax revenues.  Meanwhile, corporate tax policy allows firms like Amazon to pay minimal taxes in the UK, even as their low operating costs – thanks to a perverse structure of business rates (taxes) – contributes to the destruction of high street retail.  This is likely to have at least indirect health consequences, for example as town centre dwellers whose age, abilities or finances mean they cannot hop in the car and drive to a suburban shopping park lose ‘control over destiny’.

Against this background, central government continues to commit tens of billions of pounds to megaprojects like high speed intercity rail lines and foreign-built atomic power stations.  (Since this posting was written, George Monbiot has pointed out in The Guardian that a motorway from Oxford to Cambridge is likely to be added to the craziness.)  If the World Health Organization’s important message of health in all policies had been taken seriously, at the very least we would have independent, peer-reviewed health impact assessments of these expenditures, including alternative uses of the funds committed and of the ‘do nothing’ option.  Based on decades of experience with environmental impact assessments, these are essential.  Such assessments are nowhere to be found; health economists’ ritual incantation that resources are limited so priorities must be set clearly does not apply here.

All this will be familiar even to casual observers of UK politics, and has parallels elsewhere, although the public health community has too often remained silent about them.  At the same time, once-radical perspectives on the revenue side of the fiscal policy equation are moving into the mainstream of policy analysis, if not yet of politics.  In 2013, the former head of Canada’s national public service and his son published a powerful edited volume called Tax is Not a Four-letter Word, and decried Canada’s ‘dangerously distorted tax conversation’ – sadly, to little effect.  In February 2018, The Economist warned that ‘[I]f Britons want good public services’ as an alternative to the current collapse, then ‘they will need to pay more’ and hinted at the need for some form of wealth taxation.  In August, it was more explicit.  A leader noted that ‘Amazon’s British subsidiary paid £1.7m ($2.2m) in tax last year, on profits of £72 m’ – an effective tax rate of less than three percent.  The leader also foregrounded the need to tax windfall gains from rising property values ‘in big, global cities’ – which without an effective inheritance tax regime will magnify economic inequalities across generations –  and to reform corporate tax regimes to address the ability of firms like Amazon to shift their revenues to low-tax jurisdictions.  Further, it noted that ‘[a]s the labour market continues to polarize between high earners and everyone else’, with labour’s share of national income in much of the world in a decades-long decline, ‘income taxes should be low or negative for the lowest earners’.  A briefing in the same issue explores one intriguing option – a land value tax, which would capture windfall gains in prosperous areas – in considerable detail.  (Today, taxes on residential property in England and Scotland are assessed on real or hypothetical value in 1991, with a capped ‘top band’ that corresponds to just a small fraction of today’s seven- and eight-figure prices.)

Unfortunately, The Economist did not extend its analysis to such policy options as comprehensive wealth taxation or higher marginal tax rates and alternative minimum taxes on high-income individuals.  Nevertheless, its critical attention to public finance offers the possibility that ‘distorted tax conversations’ may become less so – offering prospects for reducing health inequalities by way of their essential economic substrate.  In these grim and disturbing times, we must seek faint hope where we can.

This posting appears as well on Policies for Equitable Access to Health.