Political Economies of Health: Political Economies of Health The Debt Crisis, Structural Adjustment & Global Health Impacts


Slide2: 19th Century PE concerned with: Theorizing production and distribution of wealth within and between political entities Class based system produced by them Aim to connect economic processes with workings of power Political Economy


Slide3: Marx and Engels = key theorists of political economy Engels “The Condition of the Working Class in England” Examination of health and living conditions during the industrial revolution “Let us investigate some of the slums…the houses are occupied from cellar to garrett, filthy within and without, and their appearance is such that no human could possibly wish to live in them…filth and tottering ruin…foul liquids emptied before the doors gather in stinking pools. Here lives the poorest of the poor, the worst paid workers with thieves and the victims of prostitutions indiscriminately huddled together…Close to the splendid houses of the rich such a lurking place of the bitterest poverty may be found.”


Contemporary PE analyses of health: Contemporary PE analyses of health Link class and health outcomes Understand class, poverty and wealth economic as fundamentally political eg studies connecting health outcomes to: Global and National Economic policy and access to health services Resource allocation eg access to water, food, drugs Employment opportunities, employment conditions, recession Poor housing conditions and state housing policy Housing conditions Colonialism and contemporary forms of class-based discrimination


Slide5: Many contemporary PE analyses of Global health concerned with: Debt Structural adjustment Neoliberalism …your readings for today!


Outline: Outline History of Debt Crisis Emerging role of The IMF Health Impacts examples from your readings Hurricane Mitch: A Nicaraguan case Study


1944: Bretton Woods: 1944: Bretton Woods Post WWII: US and Europe - Pre-war isolationism and depression - Post war economic instability and stagnancy US and UK most powerful leaders meet to create “A New Set of Rules for Global economy” “ A golden Age of Capitalism” Robbins (2004)


Slide8: Keynesian policy aimed to: - Stimulate the economy - Promote international trade - Address growing worker discontent By: Reconstruction and development Government regulation of markets: An Interventionist State Welfare system for workforce Fix $35 to 1 oz Gold Creation of GATT, World Bank…and the IMF


Stage 1: The break down of the $-Gold system: Stage 1: The break down of the $-Gold system 1971 Nixon abandons the $-Gold system for generalized system of floating exchange rates Why? declining competitiveness and growing US national debt An efficient monetary tool to avoid unpopular domestic macro-economic structural adjustment including taxation Maintain high living standards without a loss of monetary sovereignty and …


- Provides cash for Vietnam without tax rise  : - Provides cash for Vietnam without tax rise Massive increases of money due to debt and interest More $’s in circulation value of $ falls Cost of US exports falls Cost of foreign imports to US rises


Slide11: Inflationary Action!! Everyday prices and wages could not rise with inflation Gold becomes just like any other commodity- value determined by market Challenging this policy risks destabilizing institutional system of global economy and Cold War security system Other countries quickly followed suit


Stage 2: The Oil Crisis 1973-74: Stage 2: The Oil Crisis 1973-74 OPEC: The Organization of the Petroleum Exporting Countries are “pegged” to $ so affected by this devaluation They form a cartel to: - regulate and restrict production of oil - create set price of oil Oil prices rise 3-4 times!! Related price hikes throughout economy


Slide13: Huge profits created as “petrodollars” Invested in EU Banks as “Eurodollars” + US IOU’s flooding market and interest rates falling = lots of $$$$$$’s in banking system…..


Stage 3: Loans, Loans, loans: Stage 3: Loans, Loans, loans “Peripheral”/”Developing” countries encouraged to borrow Why? - Interest rates are low (so many $$$s to lend) - Greater devaluation of “soft” currencies with global inflation so need $$s to buy foreign goods - oil prices so need $$s to buy oil - Ideological pressure from US to promote capitalism and contain communism through economic stability and economic growth (and use of Western backed dictators) - Legacy of mono-export commodity = economies vulnerable to global recession and declining export commodity values eg coffee and tin


Slide15: BUT: Some $$$s misused or lost to corrupt (and often Western backed) leaders Irresponsibly lent by major banks Investment in vulnerable mono-crop commodities like coffee and large wasteful “development” projects


Stage 4: Economic restructuring in the US: Stage 4: Economic restructuring in the US Late 1970s Carter administration tightens US policy End inflationary and devaluation policies Value of $ stabilized Interest rates increased Impact globally…


Slide17: -Rising global interest rates -Rising value of $ -Continuing devaluation of “soft” currencies -Lowering values of primary commodities Money owed by countries like Guatemala, Nicaragua, South Africa dramatically increases


Stage 5: Default: Stage 5: Default 1982 Mexico defaults on debt Why? - Payment in hard stable currency - Low export values - Escalating compound interest rates Emergence of the Debt Crisis Many countries follow… …Threat to international banking system


The Debt Trap: The Debt Trap Many nations have already paid back their original debt but compound interest made repayment impossible eg Nigeria borrowed $5 billion, paid $16 billion to date and still owes $32 billion! Africa pays $10 billion /yr in debt – 4 x budget for health and education! "Debt is tearing down schools, clinics and hospitals and the effects are no less devastating than war." Dr. Adebayo Adedeji from the African Center for Development Strategy 1983-1989 $165 trillion more from periphery to core than received


Emerging Role of The IMF: Emerging Role of The IMF Private banks will no longer lend money Enter: The IMF and WB with new short term refinancing loans IMF: Neo-liberal institution - Belief in free-markets, export-led growth, minimal government regulation, rights of individual… So, loans come with conditionalities known as Structural Adjustment Policies (SAP’s) = Macro-economic packages which developing countries like Nicaragua must comply with before they can receive resources and loans IMF argues that through these policies countries will progress towards western model of efficiency, modernity and development through Privatization, Liberalization and Economic stabilization


How do you understand neoliberalism and neoliberal policy?: How do you understand neoliberalism and neoliberal policy? fiscal restraint public expenditures in fields with high economic returns tax reform financial liberalization competitive exchange rates trade liberalization removal of barriers to foreign investment, privatization of state-owned enterprises, deregulation security for property rights


Structural Adjustment Policies : Structural Adjustment Policies Increase Exports - Currency devaluation - Relax barriers to foreign direct investment - Deregulating of financial markets - Reduce/ freeze wages Privatize public sector - “Free Market Rules” - Liberalization of interest rates - Liberalize prices on everyday goods and services  - End to targeted subsidies for small business and agriculture Aim to lower inflation and stimulate growth in the economy


Slide23: Substantial cuts in public spending Large-scale public sector lay-offs Reduce social expenditures including health and education


Impacts of Structural Adjustment-World Bank report 2000: Impacts of Structural Adjustment -World Bank report 2000 In 40% countries per capita income failed to grow or shrank In 25% countries share of population living in absolute poverty increased In 23% countries life expectancy declined Income gap rose dramatically


Impacts on Healthcase studies from the readings : Impacts on Health case studies from the readings Verdugo (2004) Guatemala and health care privatization Iriat (2004) Latin America and Health Management Organizations (HMOs) Bond (2004) Water privatization and cholera Group quiz (include your names): 1. Use 1 reading to note down a specific neoliberal policy that the author describes as ‘neoliberal’. 2. What were some of the impacts (good and bad) of this policy?


Debt, SAP, Neoliberalism and Health (2)Nicaragua and Hurricane Mitch: A Political Ecology approach: Debt, SAP, Neoliberalism and Health (2) Nicaragua and Hurricane Mitch: A Political Ecology approach


Slide27: As you view the film consider: What are the causes of the long term human devastation triggered by this hurricane? Consider political, ecological, economic, social factors…


Health Impacts of Hurricane Mitch: A ‘Political Ecology’ Framework: Health Impacts of Hurricane Mitch: A ‘Political Ecology’ Framework Health Experience ‘Physical Environment’ ‘Social Environment’ Political Cultural Economic Topology Vegetation Climate