Global Health Watch 4: An Alternative World Health Report

by Bloomsbury Publishing

Overview

Global Health Watch, now in its fourth edition, is widely perceived as the definitive voice for an alternative discourse on health and healthcare. It covers a range of issues that currently impact on health, including the present political and economic architecture in a fast-changing and globalized world; a political assessment of the drive towards Universal Health Coverage; broader determinants of health, such as gender-based violence and access to water; stories of struggles, actions and change; and a scrutiny of a range of global institutions and processes. It integrates rigorous analysis, alternative proposals and stories of struggle and change to present a compelling case for a radical transformation of the way we approach actions and policies on health.

Product Details

ISBN-13:	9781783602568
Publisher:	Bloomsbury Publishing
Publication date:	11/13/2014
Sold by:	Barnes & Noble
Format:	eBook
Pages:	432
File size:	12 MB
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About the Author

The Global Health Watch is a broad collaboration of public health experts, non-governmental organizations, civil society activists, community groups, health workers and academics. It was initiated by the People's Health Movement, Global Equity Gauge Alliance and Medact as a platform of resistance to the neoliberal dominance in health.

Read an Excerpt

Global Health Watch 4

An Alternative World Health Report

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By People's Health Movement

Zed Books Ltd

Copyright © 2014 People's Health Movement, Medact, Medico International, Third World Network, Health Action International and ALAMES
All rights reserved.
ISBN: 978-1-78360-256-8

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CHAPTER 1

SECTION A

THE GLOBAL POLITICAL AND ECONOMIC ARCHITECTURE

A1 | THE HEALTH CRISES OF NEOLIBERAL GLOBALIZATION

Introduction

The global economy has had a turbulent time over the past six years, creating greater inequities in health and in its social determinants. The Great Financial Crisis (GFC) began in 2007 and had deepened by 2008, sparking unprecedented public bailouts and stimulus spending by many of the world's richest and most powerful governments. This impressively rapid mobilization of public money forestalled a Great Depression but not a Great Recession (Box A1.1) from which much of the world has yet to recover. This period of powerful state intervention into the market economy, however, was very brief, and was quickly followed by the 'austerity agenda' adopted in most of the world's countries. Austerity was argued as being essential for reducing government debt, much of which was caused by the unregulated greed of global financial institutions that necessitated costly public rescues. Many are now questioning not only the health costs of austerity, but also its economic necessity. As the director-general of UNCTAD complained in that agency's 2011 report: 'Those who support fiscal tightening argue that it is indispensable for restoring the confidence of financial markets, which is perceived as key to economic recovery. This is despite the almost universal recognition that the crisis was the result of financial market failure in the first place' (UNCTAD 2011).

This recent tumultuous period is foreshadowed by a forty-year-old uncontrolled experiment in neoliberal globalization. The past forty years have seen a particular ideology, neoliberalism, dominate the norms or rules by which globalization has expanded. There are differing definitions of neoliberalism, but they distil to the same thing: a belief that free markets, sovereign individuals, free trade, strong property rights and minimal government interference are the best recipe for enhancing human well-being. This belief, an extension of classical economic and political liberalism, was first promulgated by the Austrian economist Friedrich von Hayek in the 1940s. Hayek argued that the economy is too complex for governments to regulate, so markets should be allowed to regulate themselves through the 'rational' choices of hundreds of millions of individual producers and consumers. Two other economists of the same era, collaborators of John Maynard Keynes, expressed this somewhat differently as a belief that 'the nastiest of men for the nastiest of motives will somehow work for the benefit of all' (Robinson and Guillebaud 1941). The late Scottish-Australian health economist Gavin Mooney wrote in his last book: 'The best outcome in terms of bringing about real change would be to see an end to neo-liberalism. So many of the problems that beset societies today and their populations' health can be placed at its door ...' (Mooney 2012).

This chapter takes up Mooney's argument, and examines how and why neoliberal globalization has produced a global health crisis. It traces its forty-year history, describes three phases of neoliberalism (structural adjustment, financialization, and austerity), and examines how these phases have affected health. It then looks at oppositional or countervailing forces to neoliberalism's orthodoxy, and discusses a number of policy options and political strategies that public health activists might support or pursue to make globalization work for, or at least not against, greater equity in 'health for all'.

From Neoliberalism 1.0 to Neoliberalism 3.0: an abbreviated history

Neoliberalism 1.0: structural adjustment Although neoliberalism's key tenets were defined by Hayek before the Second World War, Keynesian economics, with its emphasis on state intervention and regulation of private markets, held sway during the post-war reconstruction period and throughout much of the following three decades. The Cold War and the bipolar world provided decolonizing countries with options to experiment with mixed economies and with assigning a strong role for the state in economic planning and management. Neoliberalism's dominance in political and economic decision-making began to emerge only in the early 1970s. This was a decade marked by an increasing pace of economic recessions, oil embargoes and oil-price shocks that quadrupled the cost of capitalism's crude energy source. To help write off its Vietnam War debts and to stimulate its domestic economy, the USA in 1971 permanently unpegged the US dollar from the gold standard. This set financial exchanges adrift, allowing money to be made through currency speculation and entrenching the US dollar as the world's 'reserve currency' held by the central banks of governments and other financial institutions 'in reserve' as a means of paying off international debt obligations and of stabilizing the value of their own currency when needed. Two years later, the 1973 military coup in Chile gave the neoliberal economic disciples of Hayek and Milton Friedman their first experimental laboratory. In quick succession, Britain's Margaret Thatcher, the USA's Ronald Reagan and Germany's Helmut Kohl joined Chile's Augusto Pinochet in ushering in neoliberalism 1.0. Although not yet a globally dominant discourse, the key tenet of Neoliberalism 1.0 was a belief that any form of state enterprise or service provision was 'second best' to private markets.

THE RISE OF NEOLIBERALISM 1.0 Neoliberalism 1.0 began its rapid ascent during the 1980s. This decade brought us the developing-world debt crisis, a result of oil-price shocks that had led many developing countries to borrow heavily to continue their post-colonial path to industrialization. First World banks flush with new 'petrodollars' lent indiscriminately, often to governments that were known or suspected to engage in corruption or misappropriation. Developing-world debt worsened dramatically when US-led monetary policy to control inflation led to huge increases in interest rates, rising from 11 per cent in 1979 to over 20 per cent in 1981. As the international debts of developing countries became due for refinancing, the super-high interest rates caused debt-servicing costs to skyrocket and debt loads to accelerate. Fearing sovereign defaults by heavily indebted countries (threatened first by Mexico) and an ensuing international financial crisis, the World Bank and the International Monetary Fund (IMF) stepped in with emergency loans and grants to keep the worst-affected nations afloat. Countries accepting these loans had to agree to several 'structural adjustment' conditionalities that embodied neoliberal economic principles, later codified as the 'Washington Consensus', named after the location of the head offices of the World Bank and the IMF. These conditionalities included:

• Privatization of state assets, in part to help governments pay off international loans;

• Deregulation, to enable rapid private-sector-led economic growth;

• Tax reform to attract foreign investment through lower corporate and marginal rates, or tax holidays, for foreign investments;

• Public deficit (the shortfall between revenues and expenditures in any single fiscal year) and debt (the total accumulated amount owed to creditors), in part to help governments pay off international loans; and

• Rapid liberalization of trade and financial markets on the theory that liberalization leads to economic growth (which it does sometimes but not always).

The health and social policy consequences of Neoliberalism 1.0 have been well documented, notably in Africa and Latin America, the two regions most affected by international debt obligations and most constrained by World Bank and IMF emergency loan conditionalities (Breman and Shelton 2001;SAPRIN 2004). These regions not only failed to grow economically (Figure A1.1), they also experienced severe retrenchments in public spending, upheavals in their domestic labour markets, and increased wealth inequalities within their borders. Central to structural adjustment was a reduction in social protection spending by governments, which subsequent analyses found to be the main cause of increases in poverty and inequality in the affected countries (UN Habitat 2003). Since poverty and inequality are the two greatest risk conditions for preventable disease, it is not surprising that structural adjustment led to a slowdown or reversal of health gains, particularly affecting the poor, rural populations, women and children (SAPRIN 2004).

NEOLIBERALISM 1.0 AND THE 'FREE TRADE' AGENDA While structural adjustment was bringing many of the world's developing countries into alignment with neoliberal orthodoxy, negotiations on trade liberalization with high-income countries were doing much the same. The General Agreement on Tariffs and Trade (GATT) was originally a post-war mechanism for voluntary tariff reductions among wealthy countries, partly intended to decrease the risk of future world wars. Earlier periods of economic recession, followed by nationalist protectionism, including extremely high tariff barriers to imports, are considered part of the political and economic contexts that had led to the First and Second World Wars. Deeply entwining the economic fortunes of countries through trade (and later investment), liberalization is thought to act as a disincentive to war, since war would go against the interests of most economic elites. GATT negotiations, however, slowly deepened and expanded their purview, bringing more of the world's nations into the negotiating orbit and extending legally binding liberalization commitments beyond simply tariff barriers to encompass trade. The birth of the World Trade Organization (WTO) in 1995 introduced a much larger set of trade treaties, many of which went well beyond eliminating tariff barriers to incorporate extensive 'trade-related' domestic regulations, thereby reducing national space for policy-making (Lee 2006;Bond 2008; Koivusalo et al. 2008). Neoliberalism 1.0 began to transform the post-war mixed-economy welfare ('well/fair') state into the globalizing competitive state, with nations vying with each other to attract increasingly footloose capital (investment) and to enter or conquer new economic markets.

Neoliberalism 2.0: financialization

THE 'TRIUMPH' OF GLOBAL CAPITALISM Throughout this period, there were efforts by the global South to create a fairer 'new international economic order' to compensate for the wrongs of colonialism and foreign economic domination. A declaration on the new international economic order was actually endorsed by the United Nations in 1974, but then soon forgotten as neoliberal economics began its push to dominance. There were also exceptions to the general trend, with some regions of the world (notably such South-East Asian countries as Thailand, Malaysia, Singapore, Hong Kong, Taiwan and South Korea) not following the neoliberal path and performing economically much better over this period (Shin and Chang 2005). The erosion of national capitalisms with the deepening of internationalized trade and financial markets and the collapse of the Soviet Union, however, gradually entrenched Neoliberalism 1.0 while introducing us to Neoliberalism 2.0: the financialization of the economy.

Capitalism's inherent tendency towards a cyclical crisis of overproduction and under-consumption, leading to a declining rate of profits, accelerated in the 1970s. This led to a process of what Patrick Bond (2008) called 'shifting and displacing'. To boost their profit rates, corporations lowered their production costs by increasing the use of labour-saving technology and by outsourcing production to low-cost countries, and opened up new markets (by expanding the breadth and scope of trade treaties that lowered tariff and non-tariff barriers to goods and investment). Meanwhile, investors increased rapidly the financialization of the economy, made possible through new digital technologies, ideologically driven bank deregulation in the USA and the UK, and removal of capital controls that allowed rapid inflow and outflow of 'hot money' across borders. The global economy continued to grow during this period, but at a slower rate than in the 1960s (World Bank 2005). It was also far from stable, lurching from one regional recession or financial crisis to another (Cornia et al. 2008). The harmful effects on health of these episodic meltdowns caused by speculative capital flows were experienced first and most severely by those who were most vulnerable and least responsible for the genesis of these effects: women, children, the rural poor (Floro and Dymski 2000; Parrado and Zenteno 2001). The GFC of 2008 is the still-evolving outcome of Neoliberalism 2.0, a crisis whose inevitability was predicted by many heterodox (non-neoliberal) economists at least a decade before it occurred (Devarakonda 2012).

CAUSES OF THE GFC The immediate causes of the GFC are now fairly well known (see also GHW3, ch. A.1, www.ghwatch.org/sites/www.ghwatch.org/files/A1.pdf).Corporate outsourcing led to large investment flows to low-wage countries. Despite China's efforts to retool its economy to increase domestic consumption (a response to the GFC's shrinking of its main export markets), its still-dominant 'factories for the world' continue to be fuelled by foreign investment, which accounts for over half of its exports and imports (World Bank 2010). Export-oriented developing countries (and especially China) accumulated huge amounts of foreign capital and banked this in low-interest-paying US treasury bills (the 'reserve currency'), while also having to borrow for short-term purposes on international markets at much higher interest rates. As a result of the interest-rate spread, developing countries by 2008 had transferred almost US$900 billion more annually to the USA and to other wealthy countries than they received in foreign investments or in foreign aid (UN DESA 2010). Investment banks and institutions in the rich world leveraged much of this new capital to bet on currencies, stocks and real estate, discovering that it was easier and faster to make money from money than lending it to the 'real economy' of production and consumption upon which most people rely for their livelihoods (Wade 2009). The USA and the UK were the two heavyweights when it came to staking their economic future on such financialization. 'Sub-prime' lending by banks led to the US housing bubble which helped the debt-financed consumption of cheap Chinese goods by that country's declining (outsourced) industrial working and middle classes. Imprudent loans that led to the real estate bubble in the south of Europe did much the same for the Eurozone.

The scale of this financialization is almost hard to imagine – the value of outstanding derivatives in 2011 exceeding US$700 trillion, or more than ten times the total value of the world's GDP (Figure A1.2) (see Box A1.2).

This represents an increase of over US$100 trillion in the six-month post-financial crisis period between 31 December 2010 and 30 June 2011, illustrating that what Susan George calls 'casino capitalism' (George 2008) and what David Korten (Korten 2001) describes as the 'funny money' game is far from being played out (Box A1.3).

To set the scale of this economic financialization in recent context: in 1980, the total value of all financial assets in the world was roughly equal to that of the world's GDP. In 2007, the total annual amount of foreign direct investment (FDI) that went into this real economy was US$1.7 trillion, a substantial amount but paltry when compared to the daily amount of currency exchanges in 2007 of US$3.4 trillion. In late 2011, and despite the GFC, this daily arbitrage clocked in at almost US$5 trillion (Bech 2012).

TRANSFERRING PUBLIC WEALTH TO CORPORATIONS The real toxicity of the financialized economy came in the form of 'asset backed commercial papers' (ABCPs), which bundled mortgage loans (debts) – many of them sub-prime and doomed to default – and aggressively sold them as sound investments. ABCPs allowed banks engaged in reckless lending practices to high-risk borrowers in an inflated housing market to offload their financial risks to others. Individuals, pension funds and other banks around the world bought into this scheme, partly on the strong endorsements of ABCPs by bond-rating agencies and by banks and their brokers selling them. This 'banking on bubbles' began to unravel in 2007 with the collapse of the US housing market, leading to credit crunches (where banks refuse to lend to people, firms, countries or each other). The GFC was quickly followed by economic recession, countercyclical public spending (so called because the spending goes against, or is counter to, the business cycle) and publicly financed bailouts to cover the risks taken by private financiers. One estimate of the total amount of public financing that went into the bank rescues places it at US$11.7 trillion (Ortiz and Cummins 2013), several hundred billion of which were direct subsidies (Haldane et al. 2010). Less evident but more systemic are the interest-rate spreads on what governments provide to banks (whose credit rating assumes government bailouts when they fail), and what they then borrow back to cover this lending (with their own credit rating downgraded because of their rescues of banks, leading to higher borrowing costs). This interest-rate spread comprises a massive transfer of public wealth to the very corporations and individuals that were responsible for the GFC (Altvater and Mahnkopf 2012; Ortiz and Cummins 2013).

(Continues...)

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Excerpted from Global Health Watch 4 by People's Health Movement. Copyright © 2014 People's Health Movement, Medact, Medico International, Third World Network, Health Action International and ALAMES. Excerpted by permission of Zed Books Ltd.
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Table of Contents

Introduction
Section A: The Global Political and Economic Architecture
A1 The Health Crises of Neoliberal Globalization
A2 Fiscal Policies in Europe in the Wake of the Economic Crisis: Implications for Health
A3 Social Struggle, Progressive Governments, and Health in Latin America
A4 After the Arab Spring

Section B: Health systems: current issues and debates
B1. The Current Discourse on Universal Health Coverage (UHC)
B2. The National Health Service (NHS): Prey to Neoliberal Lust for Markets
B3. Reform of the Mexican Healthcare System: The Untold Story
B4. Brazil: The Rocky Road to a Universal Healthcare System
B5. South Africa: Building or Destroying Health Systems?
B6. The Right to Health in Tunisia
B7. The Revival of Community Health Workers in National Health Systems
B8. The Crisis of Maternal and Reproductive Health
B9. The Global Health Workforce Crisis
B10. The Politics and Landscape of Medical Devices in a Global Market

Section C: Beyond Healthcare
C1. Social Protection: Reimagining Development
C2. Non-Communicable Diseases: Is Big Business Hijacking the Debate?
C3. Nutrition and Food Sovereignty
C4. Breaking Free from Gender-Based Violence
C5. Talking Shit: Is Community Led Total Sanitation Empowering or Divisive?
C6. Extractive Industries and Health

Section D: Watching
D1. WHO Reform: For What Purpose?
D2. A New 'Business Model' for NGOs?
D3. Private Sector Influence on Public Health Policy
D4. The TRIPS Agreement: Two Decades of Failed Promises
D5. Cholera Epidemic in Haiti
D6. The International Finance Corporation's 'Health in Africa' Initiative
D7. The Ethical Cost of Offshoring Clinical Trials

Section E: Resistance, Actions and Change
E1. Reframing Health in Bolivia Around the Concept of 'Living Well'
E2. Social Shange in El Salvador and the Health Sector
E3. Venezuela: The Impact on Health of Social Change
E4. Colombia: Social Struggles Against the Commodification of Health
E5. Peru: Social Movement Against Neoliberal Reforms
E6. Struggles for Health in Europe
E7. The Struggle Against a Destructive Mining Project in Greece
E8. The Right to Food campaign in India
E9. Aboriginal Community-Controlled Health Services in Australia