Austerity kills

Austerity has killed thousands of people. And it is killing the hopes of millions more—in Greece, Britain, the United States, and elsewhere.

Detailing a decade of research, Oxford University political economist David Stuckler and Sanjay Basu, an assistant professor of medicine and an epidemiologist at Stanford University, said their findings show austerity is seriously bad for health.

In a book to be published this week, the researchers say more than 10,000 suicides and up to a million cases of depression have been diagnosed during what they call the “Great Recession” and its accompanying austerity across Europe and North America.

The United States Centers for Disease Control and Prevention is now reporting that, in 2009, the number of deaths from suicide surpassed the number of deaths from motor vehicle crashes.

Suicide rates among both men and women aged 35–64 years increased substantially from 1999 and 2010. This finding is consistent with a previous study that showed a notable increase in the overall suicide rate among middle-aged adults relative to a small increase in suicide rates among younger persons and a small decline in older persons during a similar period. The increases were geographically widespread and occurred in states with high, as well as average and low suicide rates.

The CDC notes that possible contributing factors for the rise in suicide rates among middle-aged adults “include the recent economic downturn.”

Try as they might to give the impression of being Very Serious People, those who continue to support the imposition of austerity measures in Europe and North America have blood on their hands.

Greek tragedy

Every time a student asserts that the United States is on the path to Greece, I have to pause, collect my wits, and explain once again why they’re wrong.

They’re wrong about the United States. And they’re wrong about Greece.

I have to remind myself, it’s not their fault: they’ve been bamboozled by the Chicken Little austerians (like Joe Scarborough and Jeffrey Sachs) into believing that the growing fiscal debt is sending the United States inexorably toward a tipping point, just like Greece.

But it’s simply not true. First, I explain for the umpteenth time, the United States borrows in a currency it controls. So, it can always print money to repay the debt. And right now, the world is actually paying the United States to lend us its money. So, no, there is no Greek tragedy looming in the United States.

And that’s exactly what Matthew O’Brien concludes:

Not all debt is created equal. Countries that borrow in a currency they control play under a different set of rules. They can never run out of money to pay back what they owe, since they can always print what they need as a last resort. That’s not to say they actually do or should turn to the printing-press to finance themselves. But the option to do so calms markets. After all, inflation is a lot less bad than default for creditors. That’s why it’s no so easy for countries that don’t borrow in a currency they control. They can default. And this is a case where thinking can make things so. Indeed, as Paul De Grauwe points out, countries that don’t have their own central bank, like euro members, can fall victim to self-fulfilling panics that push them into bankruptcy. In other words, markets force up interest rates because they fear default — which then pushes them into default. It’s a bank-run on a country.

And then I proceed to explain, also for the umpteenth time, that the crisis in Greece is not about government debt. It’s about debt owed to foreigners, who in turn have imposed austerity policies that are making things even worse.

Which is exactly what Joe Stiglitz is arguing:

What will not work, at least for most eurozone countries, is internal devaluation – that is, forcing down wages and prices – as this would increase the debt burden for households, firms, and governments (which overwhelmingly hold euro-denominated debts).

And, with adjustments in different sectors occurring at different speeds, deflation would fuel massive distortions in the economy.

If internal devaluation were the solution, the gold standard would not have been a problem in the Great Depression. Internal devaluation, combined with austerity and the single-market principle (which facilitates capital flight and the haemorrhaging of banking systems), is a toxic combination.

The European project was, and is, a great political idea. It has the potential to promote prosperity and peace. But, rather than enhancing solidarity within Europe, it is sowing seeds of discord within and between countries.

The real Greek tragedy is that austerity advocates have imposed all the costs of adjustment on ordinary Greek people, who continue to suffer from falling incomes and growing unemployment, which ultimately for the most desperate leads to suicide.

And when someone actually runs the numbers on debt and borrowing costs? Well, let’s give O’Brien the last word:

Beware economists bearing regressions — and journalists too. My sample sizes here are so ridiculously small that the results are hardly dispositive. So don’t pay attention to the evidence. Pay attention to the lack of evidence.

There isn’t any evidence that the U.S., or other countries that borrow in currencies they control, face some debt tipping point after which borrowing costs spiral out of control. There isn’t even much evidence this is true of Europe’s troubled economies. . .

Our Greek chorus are more Chicken Littles than Cassandras.

Capitalism: a suicide story

We know that capitalism kills. We’re now learning that it induces people to kill themselves.

According to a new study published on The Lancet [pdf], the rate of suicide in the United States rose sharply during the years after the start of the most recent recession.

In the years before the onset of the crisis (from 1999 to 2007), the suicide mortality rate in the USA was rising on average at a rate of 0·12 per 100000 per year (95% CI 0·09–0·14; figure). Coinciding with the onset of the recession, the suicide rate accelerated. There were an additional 0·51 deaths per 100000 per year (95% CI 0·28–0·75) in 2008–10. This acceleration corresponds to an additional 1580 suicides per year (95% CI 860–2300). Thus, during the recessionary period after 2007, there were an estimated 4750 excess suicide deaths (95% CI 2570–6920).

The suicide rate associated with unemployment is even higher in the United States than in Europe.

Since the rate of unemployment between 2007 and 2010 in the USA increased from 5·8% to 9·6%, our model indicates that the rise in US unemployment during the recession is associated with a 3·8% increase in the suicide rate, corresponding to about 1330 suicides. In other words, rising unemployment could account for about a quarter of the excess suicides noted in the USA during this time.

Clearly, capitalism in crisis is a story of increased suicides.

Cashing in—and cashing out

Who’s cashing in, and what are they cashing in on? And who’s cashing out?

The Massachusetts Institute of Technology is cashing in, via MITx—its new, interactive e-learning venture—by providing the courses online for free but charging “a ‘modest’ fee for certificates that indicate a learner has mastered the content.”

The alternative, of course, would be to support the public university system, and allow all students to get a real college education in residence.

Ian Ayres and Aaron S. Edlin believe we should cash in on the growth of income and wealth by the top 1 percent, by using the Brandeis Ratio—the ratio of the average income of the nation’s richest 1 percent to the median household income—as a trigger to create a new top-income tax bracket.

Or we could use Brandeis’s warning—that “We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both”—to find a way of creating democracy in both political and economic institutions.

Blake Gopnik sees the super-rich using their piles of cash to buy up contemporary art, thereby creating a modern-day equivalent of the potlatch of the Pacific Northwest (“where the goal was to ostentatiously give away, even destroy, as much of your wealth as possible—to show that you could”), which blurs the boundary between aesthetic and economic value.

Which doesn’t stop Gopnik from offering his suggestions of “five highly touted artists whose works are lousy investments.”

Multi-millionaires in Hong Kong and elsewhere are cashing in on their growing wealth to purchase not only Asian art but also “wine, gems, watches, postage stamps and other memorabilia–the rarer and more exclusive, the better.”

As Jack Amariglio suggested, we shouldn’t “be shocked if new theories and conceptions of what is beautiful and worth owning and displaying, once again, is radically revised such that what is now considered primarily ‘mundane’ and prosaic among the vast amount of Chinese artistic productions of the past becomes the newly discovered ‘treasures’ and ‘wonders’. . .of the global aesthetic consciousness.

The Freakonomics team of Steven D. Levitt and Stephen J. Dubner have certainly been cashing in, with their growing franchise consisting of a bestselling sequel, SuperFreakonomics, an occasional column in the New York Times Magazine, a popular blog, and a documentary film.

However, as Andrew Gelman and Kaiser Fung explain, Levitt and Dubner have made a number of avoidable mistakes, “from back-of-the-envelope analyses gone wrong to unexamined assumptions to an uncritical reliance on the work of Levitt’s friends and colleagues.”

And then, as Barbara Ehrenreich and John Ehrenreich explain, it’s not the “liberal elite” but the top 1 percent of the wealth distribution—the “bankers, hedge-fund managers, and CEOs targeted by the Occupy Wall Street movement—that has been cashing in, thereby creating the 99 percent.

As it happened, the idea of the “liberal elite” could not survive the depredations of the 1% in the late 2000s. For one thing, it was summarily eclipsed by the discovery of the actual Wall Street-based elite and their crimes. Compared to them, professionals and managers, no matter how annoying, were pikers. The doctor or school principal might be overbearing, the professor and the social worker might be condescending, but only the 1% took your house away.

Finally, there are all the Greek people who, in the midst of the current crises, appear to be cashing out—leading to the highest rate of suicide in Europe.

Painful austerity measures and a seemingly endless economic drama is exacting a deadly toll on the nation. Statistics released by the Greek ministry of health show a 40% rise in those taking their own lives between January and May this year compared to the same period in 2010.

Before the financial crisis first began to bite three years ago, Greece had the lowest suicide rate in Europe at 2.8 per 100,000 inhabitants. It now has almost double that number, the highest on the continent, despite the stigma in a nation where the Orthodox church refuses funeral rights for those who take their lives. Attempted suicides have also increased.

“It’s never just one thing, but almost always debts, joblessness, the fear of being fired are cited when people phone in to say they are contemplating ending their lives,” said Eleni Beikari, a psychiatrist at the non-governmental organisation, Klimaka, which runs a 24-hour suicide hotline.

Capitalism’s assisted suicides

Capitalism may not yet have killed itself. But capitalist crises do help people kill themselves.

According to a new study, there’s a clear correlation between suicide rates and the business cycle among young and middle-age adults.

In the study, which appears in The American Journal of Public Health, researchers at the federal Centers for Disease Control and Prevention examined suicide rates per 100,000 Americans for every year from 1928 to 2007.

To investigate the effect of business cycles, the researchers calculated the average rate during periods when the economy contracted and compared it with the average during the years leading to downturns. The sharpest increase occurred at the start of the Great Depression, when rates jumped 23 percent — to 22.1 in 1932, from 18.0 in 1928. The study found smaller bumps during the oil crisis of the early 1970s and the double-dip recession of the early 1980s, among other economic troughs.

The suicide rate generally fell during periods of economic expansion, with some exceptions. Rates among people in their 30s and 40s went up during the booming 1960s and actually decreased among the elderly in the severe recession of the mid-1970s. . .

Feijun Luo, the lead author of the study, said, “The findings suggest the potential to see a big increase in the rates during this current recession.”

Individual suicides may be impossible to predict. But it is possible to predict that an increase in suicide rates is associated with capitalist crises.

In other words, capitalism kills.

Suicides and luxury cars

Only under capitalism are suicides closely related to the purchase of luxury cars.

You have to look to India to see the relationship. There, according to P. Sainath, 17,368 farmers killed themselves over the course of 2009—while, in October, businessmen from Aurangabad in the Marathwada region of the state of Maharashtra bought 150 Mercedes Benz luxury cars. The connection?

The value of the Mercedes deal equals the annual income of tens of thousands of rural Marathwada households. And countless farmers in Maharashtra struggle to get any loans from formal sources of credit. It took roughly a decade and tens of thousands of suicides before Indian farmers got loans at 7 per cent interest — many, in theory only. Prior to 2005, those who got any bank loans at all shelled out between 9 and 12 per cent. Several were forced to take non-agricultural loans at even higher rates of interest. Buy a Mercedes, pay 7 per cent interest. Buy a tractor, pay 12 per cent. The hallowed micro-finance institutions (MFIs) do worse. There, it’s smaller sums at interest rates of between 24 and 36 per cent or higher.

Farming households, starved of credit to purchase agricultural inputs, have had to turn to moneylenders, loan sharks, and other “non-official” sources of credit. And, with crashing commodity prices, and increasing levels of debt they have no hope of repaying, farmers have been committing suicide in record numbers. The total farm suicides since 1997 have now reached over 2 million.

Meanwhile, in November, a new group of 101 businessmen from Aurangabad made the decision to buy BMW cars.

Capitalist unemployment kills

Many people will never recover from the current recovery: they will have committed suicide.

Annie Lowry has been investigating chronic joblessness at the Washington Independent. Yesterday, she wrote about suicide—the fact that “the unemployed commit suicide at a rate two or three times the national average” and “the longer the spell of unemployment, the higher the likelihood of suicide.”

Right now, no one knows how many additional suicides the Great Recession has caused, because the lag in the statistics is about three years. But, according to Lowry, “looking at individual counties’ or cities’ data, there are ominous signs of a real spike.” For example,

In rural Elkhart County, Ind., where the unemployment rate is 13.7 percent, there were nearly 40 percent more suicides in 2009 than in a normal year. In Macomb County, Mich., where the unemployment rate is also 13.7 percent, an average of 81 people per year committed suicide between 1979 and 2006. That climbed to 104 in 2008 and to more than 180 in 2009.

Under capitalism, many people are forced to have the freedom to sell their labor power. In the current crises, when many of them can’t, they are forced to have the freedom to take their own lives. Those who do so will never recover from the current recovery.