Political Economies of Health

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Political Economies of Health

• The Debt Crisis, Structural Adjustment Global
  Health Impacts

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Political Economy

• 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

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• 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 slumsthe 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
  themfilth and tottering ruinfoul 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
  togetherClose to the splendid houses of the
  rich such a lurking place of the bitterest
  poverty may be found.

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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

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• Many contemporary PE analyses of Global health
  concerned with
• Debt
• Structural adjustment
• Neoliberalism

your readings for today!
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Outline

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

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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)

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• 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

Creation of GATT, World Bankand the IMF
Fix 35 to 1 oz Gold
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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

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- Provides cash for Vietnam without tax
rise
Massive increases of money due to debt and
interest More s in circulation
value of fallsCost of US exports
fallsCost of foreign imports to US
rises
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• 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

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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

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• Huge profits created as petrodollars

Invested in EU Banks as Eurodollars
US IOUs flooding market and interest rates
falling lots of s in banking system..
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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
• 
  

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• 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

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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
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• -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

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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

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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

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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 (SAPs)
• 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

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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

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Structural Adjustment Policies
Aim to lower inflation and stimulate growth in
the economy

• 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

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

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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

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Impacts on Healthcase 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?
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Debt, SAP, Neoliberalism and Health
(2)Nicaragua and Hurricane Mitch A Political
Ecology approach

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