Normative Narratives

Conflict Watch: Austerity v. Human Rights

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Original article:

“Austerity cuts in Spain could lead to the effective dismantling of large parts of its healthcare system and significantly damage the health of the population, according to a study published on Thursday.”

“The study published in the British medical Journal (BMJ) found that Spain’s national budget cuts of almost 14 percent and regional budget cuts of up to 10 percent in health and social services in 2012 have coincided with increased demands for care, particularly from the elderly, disabled and mentally ill.

The researchers also noted increases in depression, alcohol-related disorders and suicides in Spain since the financial crisis hit and unemployment increased.”

“The findings in Spain chime with other studies in Europe and North America which found budget cuts had a devastating effect on health, driving up suicides, depression and infectious diseases and reducing access to medicines and care.”

“‘If no corrective measures are implemented, this could worsen with the risk of increases in HIV and tuberculosis — as we have seen in Greece where healthcare services have had severe cuts — as well as the risk of a rise in drug resistance and spread of disease,’ said Helena Legido-Quigley, a lecturer in Global Health at LSHTM who worked with McKee.”

“In a book published in April, researchers said around 10,000 suicides and a million cases of depression had been diagnosed during what they called the “Great Recession” and the austerity measures that have come with it across Europe and North America.”

This is Spain we are talking about here–a high income, EU country. Perhaps incomes are too high, as unemployment remains above 27.2% (and 57 % for people under 25). Since Spain is a Euro country, it cannot devalue it’s currency to bring its wages back to a competitive level, it must pursue painful “internal devaluation”–a mixture of austerity and structural reform that has a contractionary effect on the economy in the short-run (especially when the fiscal-multiplier is >1, as evidence suggests it currently is).

This is of course unacceptable. Fiscal constraints did not stop large scale financial sector bailouts or military expenditure, but when it comes to financing social programs needed for governments to fulfill their basic human rights obligations there is suddenly no money available. Clearly governments around the world have their priorities out of order.

Unemployment, especially long term unemployment and youth unemployment, has a corrosive effect on society. In America, people are outraged over 8% unemployment, can you imagine a rate 300% higher? 700% higher!? There is literally Great Depression level unemployment in Spain and Greece, now 5 years after the Great Recession began.

The corrosive impact of unemployment creates a vicious cycle of human suffering. A lack of demand leads companies to lay workers off. Lower output leads to less tax revenue for the government, and global economic factors made resources scarcer, driving up borrowing costs. Governments, unable to borrow  money at reasonable rates, must slash social programs and government employment.

The unemployed, increasingly pessimistic, turn to risky behavior, including prostitution and drug use. This in turn leads to greater unfulfilled health needs, including untreated mental disorders. Long term unemployment, drug use, physical and mental illness all deteriorate worker skills, making them increasingly dependent on shrinking government resources. Stigmatization, the idea that the unemployed and homeless are that way because they are lazy or bad, becomes self-fulfilling.

Anti-social behavior becomes the norm, and before long even those who were not directly affected by the economic downturn begin to experience the realities of general societal degradation–increased crime and reduced personal security. Taken to it’s extreme, austerity in the face of a depressed economy lays the groundwork for protracted social conflict (PSC).   

The problem here is that social programs are being cut precisely when people need them the most. Fiscal policy should be counter-cyclical. When times are good, a prudent nation will save money for a rainy day. This is what President Clinton was attempting, and had President Bush’s “starve the beast” tax and military policies not bankrupted America, our national debt would be much lower today.

But America is seen as a safe haven, allowing debt to be rolled-over sustainably despite a high debt/GDP ration. If anything, Obamacare is evidence that the U.S. government is moving in the direction of greater public service expenditure.

This is not the case in Europe. Due to a lack of fiscal integration, peripheral EU countries (the GIPSI countries) suffered from higher interest rates (nobody wanted to lend to them as them scrambled to rescue a failing banking sector) leading to a “sovereign debt crisis”. The European Central Bank eventually decided to play the “lender of last resort” role, but on the condition that economically crippling austerity measures are passed.

It has always been clear that austerity programs have adverse human rights implications. The programs that are cut go predominantly to the most vulnerable people–human rights violations tend to compound one another.

Before we get ahead of ourselves, Europe is not heading for anarchy and regular unchecked violence in the streets. However, in some areas protests have already become the norm, and such a future is not impossible to foresee especially if the combination of depression-level unemployment rates, anti-social behavior, and crippling austerity persists.

Recently, the IMF admitted it was wrong about its the impact it believed austerity would have in Greece. This lesson will be painfully learned in many other countries unless something is done to fix this mistake (ending austerity conditions in order to unlock bailout loans). Admitting you made a mistake is the first step towards redress and accountability–it is past time governments were held accountable for their human rights obligations, in both the developing and developed world.

Only when human rights obligations are fulfilled can we achieve sustainable human development and economic growth, predominantly through the real and creative economies (as opposed to unsustainable economic development based on “financialization“).

However, this is only the first step, now international economic institutions have to “put their money where their mouths are” and make up for the needless suffering caused by general incompetence.

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3 thoughts on “Conflict Watch: Austerity v. Human Rights

  1. Pingback: Economic Outlook: European Youth Unemployment, Public-Private Partnerships and the “Magic” of Fiscal Stimulus | Normative Narratives

  2. Pingback: Transparency Report: The UK, Kazakhstan, Domestic and Extra-Territorial Human Rights Obligations | Normative Narratives

  3. Pingback: Economic Outlook: The G20, Austerity v. Stimulus, Growth and the Right to Development | Normative Narratives

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