The economics, and politics of health

Homeless health and health inequality occur in a wider economic, social and political context. Societal views of, and tolerance for poverty and inequality vary across time and between cultures. In Australia, typical of English speaking western countries, we had increased equality, increased equality of opportunity and increased social mobility between the 1950s and 1970s followed by increased inequality from the 1980s to 2000s when rates of inequality stabilised at a higher level (Productivity Commission, 2018; D. W. Johnson & Wilkins, 2006; McLachlan, Gilfillan, & Gordon, 2013; Stiglitz, 2012; Swan & Cooney, 2016). Economists expect inequality to be aggravated by the effects of COVID19.(ref)
In 2015 Australia had slightly above average income inequality among the Organisation for Economic Co-operation and Development (OECD) countries. It has higher income inequality than Greece, Ireland, France, Austria, and Canada but less income inequality than Portugal, the UK or the USA (OECD, 2015; Wilkinson & Pickett, 2018).
There are divergent views in economics. One view, characterised as conservative, and referred to as economic rationalism or neo-liberal, privileges individual rights and small government. The other, liberal or social democrat view, focusses more on the social whole, the greater good rather than the individual. Liberal democrats like myself would argue that the privileging of the individual tends only to be applied to individuals who have significant personal resources.

The conservative economic view
The politically conservative approach has been in the ascendancy in the English speaking west since the 1980s. Features of this view include a belief in small government, low taxes, individual choice, the centrality of economic growth and faith in market processes (Boettke, 2018). Incarnations of this approach vary (Redden, 2019). Key features of the Australian manifestation are discussed to illuminate the contemporary political, economic and social thinking within which Australian inequality, economic policy, and hence health policy sits.
Conservative commentary on increased inequality and relative poverty has been characterised by conservative thinkers in Australia as the ‘politics of envy’, or ‘class wars’. The people affected are referred to as ‘leaners’, and strategies to moderate the effects as a ‘nanny state’ (AFR, 2014; Corn, 2012; IPA, 2018). These terms represent a negative view both of the people who have least, and on attempts to ameliorate their circumstances.
Gina Rinehart, a mining magnate and funder of the influential conservative Australian think tank, the Institute of Public Affairs (IPA) was quoted as saying “If you’re jealous of those with more money, don’t just sit there and complain. Do something to make more money yourself – spend less time drinking or smoking and socialising, and more time working” (ABC, 2012). Similarly, the conservative Prime Minister Scott Morrison in 2019 said “I believe in a fair go for those who have a go…” implying both that those who have not succeeded financially have not tried and are not contributing to our society (Murphy, 2019). People who are worse off are held responsible for their own circumstances. This parallels views held in nineteenth century England when poverty was seen as the result of “individual weakness of character – drunkenness, improvidence, fecklessness” (Townsend, 1979). The poor and disadvantaged are seen as not trying hard enough and as being an imposition on others.
This individuation of responsibility was notably captured by Thatcher (Margaret Thatcher, PM of UK 1979-1990) in 1987 “… And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first” (Thatcher, 1987). Welfare has been well intentioned but taken advantage of. People should take responsibility for themselves. Those who are taking responsibility should not have to pick up the tab for those who aren’t. Tax is an imposition that unnecessarily limits taxpayers’ choices.
Conservative treasurer in 2019, Josh Frydenberg captured the economic premise of his government in a blog post ‘Creating a stronger economy’. He highlights the emphasis on economic growth as a driver for higher employment rates and thus more people living independently of government (Freydenberg 2019). In this economic perspective, investment supports job growth and investment can be supported by tax relief to those who create jobs; investors, the wealthy and businesses. In Frydenberg’s view, ‘If government … gets too big … it smothers, and even extinguishes in some cases an individual’s freedom of choice (Frydenberg, 2015). So, smaller government and more left to the market is the conservative preference. The conservative understanding of economics is seated in upward re-distribution through tax cuts, and subsidies for investors and is intended to stimulate economic growth (Redden, 2019). Promises of lower taxes were a feature of the conservative Liberal party’s successful 2019 Australian election campaign.
Economic growth in turn, is seen to produce more jobs and a growing economy is seen to benefit all. Protecting the rights (wealth) of individuals, enables them to invest and contribute to economic growth. Redden (2019) argues that the Howard Liberal coalition governments of 1996-2007 created an ’investor state’ that supported markets and investors as against non-market welfare. He observed this to underlie increased wealth and income inequality in Australia resulting from upward re-distribution rather than producing economic growth.

The conservative view of health and welfare
Welfare, however is viewed by neo-liberals as an expense that removes resources from the economy and reduces incentives for self-reliance. Calls for increased equity are seen as an imposition on those with resources by those without. Dorfman, a neo-liberal economist characterises this view. Calls to address inequality are an “appeal to voters’ envy and greed, promising to seize wealth from the (evil) rich and hand it out in the form of free goodies (higher minimum wage, basic income!). Such policies do not grow the economy, they just transfer money from one group of people to another” (Dorfman, 2014).
Under governments of both major parties, Australia moved away from the social-democratic concept of citizenship and a social contract. The application of neo-liberalism to welfare delivery is characterised by privatisation (Job Services, child protection) reducing the role and the size of government. It has also involved increasingly restricted access to income support. This has been associated with punitive attitudes and more stringent welfare availability (Auditor-General, 2018; Wacquant, 2009).
In Australia we saw people moved from the more secure Disability Pension and Supporting Parents Benefit onto the lower paying more highly monitored ‘Newstart’ Allowance (ACOSS, 2018). Others have been moved to the Cashless Debit Card which restricts people’s discretion over their spending. This latter despite inadequate and conflicting evidence for its efficacy (Auditor-General, 2018). Newstart is punishingly low, has harsh reporting requirements and includes a work for the dole requirement (ACOSS, 2019). ParentsNext requires sole parents to attend compulsory activities regardless of transport or other commitments and the Robodebt funds recovery system was associated with multiple errors and significant emotional and psychological harm to those affected (Henriques-Gomes, 2018). Maximising individual choice is not a principle applied to welfare dependents.
Individual responsibility does however apply to health where poor diet and smoking are seen as individual choices rather than resulting from disadvantage (Mantoura & Morrison, 2016). The shift to conservative economics was exemplified by the introduction of austerity measures in Europe during the global financial crisis of 2007-2008, where it was associated with deteriorating health outcomes (Mackenbach, 2006; Stuckler & Basu, 2013). Under conservative influenced economic policies of both Australia’s major parties, the national government free and universal Community Health programme has been significantly wound back and public primary health services are now largely offered through the Federal government Primary Health Networks (PHNs). The PHNs make provision at a regional level semi-privately through contracted or commissioned providers. Many allied health services involve a gap fee.

Social democrat economic health and welfare view
In contrast to the individualist conservative view, the social-democrat view is based in an idea of a co-operative society in which we are all valued and all are entitled to the fruits of the whole. In the social democrat view, downward redistribution is used to reduce the inevitable inequality generated by the operation of markets (Piketty, 2014).
Through interventions, governments can have a profound impact on public health. Australia’s Labor Whitlam government in the 1970s introduced universal health coverage, Medicare (then called Medibank), which provides basic health and hospital services to all Australians through a public contribution scheme. That government’s Community Health programme with primary health care at the front end; free, centrally located, accessible, participatory, multi-disciplinary, and locally operated was notably close to what the current evidence suggests is best for serving the most needy (Levesque, Harris, & Russell, 2013; Wen et al., 2007). It involved a shift away from a solely bio-medical model of health to incorporate a social approach.
The effects of greater inequality are associated with both increased poverty and increased relative poverty. Both poverty and inequality per se, are associated with poorer health outcomes primarily for those directly affected but also across the wider population (Marmot, 2004a, 2004b; Stiglitz, 2012; Wilkinson & Pickett, 2018). That is, as inequality increases the health of those at the top of the wealth and income pyramid also begins to decline. This is illustrated by the USA, a rich country with high inequality and concomitantly high mental illness, stress, reduced civic participation and reduced child well-being compared with countries with lower inequality (Wilkinson & Pickett, 2018, p. 107).
The OECD advocates for greater equality, arguing that this fosters economic growth, new investment and benefits society overall, not just the poor (OECD 2015). A contributing factor in capitalist systems will be the contribution to consumption from those with least if they have enough. This was born out during COVID19 when Centrelink incomes were temporarily increased as people were able to purchase medications and clothes and pay down debts.
The OECD and Stiglitz provide evidence for the relationship between, greater equality and economic growth. This alternative economic view argues that the privileging of economics over social wellbeing and the social contract fails to recognise that societal protection of the weak leads to greater social stability for all as well as being of economic benefit (Stiglitz, 2012; Wilkinson & Pickett, 2018). This includes less crime and more safety. In this view, allowing inequality to grow is not economically sound (ILO, 2014; Piketty, 2014; Stiglitz, 2012). Wilkinson & Pickett’s work, based on the data from Stiglitz, the OECD and the International Labour Organisation (ILO) identifies improved health across all income levels associated with increased income equality, though with the greatest gains at lower incomes (2018).

Summary: economics and politics of health
The politics of health is ideological and sits within a debate between the arguable prioritising of economic policies or social ones (Kickbusch, 2015). Health is political because it involves a continuous struggle among competing interests: it is inevitably determined by decisions over the distribution of resources and those decisions are affected by power. Action on the economic and social factors contributing to health inequity would need to be addressed within the economic and political sectors involving both local and global levels (Ottersen et al., 2014). Health inequality, in the social-democrat view, is an outcome of conservative political economics and is not amenable to action solely or primarily through health services interventions.
These economic and political factors have contributed to the failure to implement a number of evidence based policies to improve national health outcomes. Most obviously, the provision of public housing and the raising of the unemployment benefit rate. We could reasonably expect punitive welfare measures, in adding stress, decreasing control and reducing income and access to other resources to have a measurable deleterious effect on the health of the poorest in the Australian community. We have certainly seen a parallel increase in prison population (ABS, 2018) and increases in suicide (ABS, 2017). We also have a flattening of our increase in life expectancy for the first time in many years (Lopez & Adair, 2019). These trends are associated with increasing inequality. The causality case for this is made in the economic and epidemiological research of Stiglitz, and Marmot and Wilkinson.
The competition between economic and social priorities and between conservative and social-democrat views of what is ‘best’ significantly influences health outcomes especially at the levels of society most affected by poverty. The shift to conservatism from the 1980s has been associated with increased inequality, poverty and health challenges, in a number of western countries (Mackenbach, 2006; Wilkinson & Pickett, 2018). It has been during this period that the epidemiological understanding of health inequality has burgeoned. Mackenbach (2014) has argued for health researchers to become more politically ‘savvy’ and Kickbusch (2015) argues that new approaches to research are needed to prompt policy makers to implement the evidence, and to take political action on poverty and health inequality.

This entry was posted in Uncategorized. Bookmark the permalink.