The implications of rising levels of inequality for the economy and indeed the future of capitalism are gaining plenty of attention thanks to the splash being created by a new book by economist Thomas Piketty, Capital in the Twenty-First Century.
Piketty, professor at the Paris School of Economics, reportedly calls for a return to far higher marginal tax rates on top incomes and a progressive global wealth tax.
But the health consequences of increasing inequality generally struggle to gain much of a share of the public limelight.
However, a symposium recently hosted by the Menzies Centre for Health Policy at the Australian National University shone a spotlight on how social and health inequities are not natural phenomena, but the result of poor policies, unfair economic arrangements and bad politics.
Thanks to Menzies Centre director Professor Sharon Friel and Mr Sunil Ponnamperuma from the National Centre for Epidemiology and Population Health at the Australian National University for providing this report on the symposium.
Power, money and resources – shaping health inequities
Sharon Friel and Sunil Ponnamperuma write:
It is just over five years since the World Health Organisation Commission on Social Determinants of Health made a headline recommendation on the need to improve the distribution of power, money and resources if global health inequities are to be reduced.
The aim of the symposium titled “Power, money and resources: addressing the drivers of health inequity”, held in Canberra on 3rd April 2014, was to engage policy makers from different Australian government departments and researchers from public health, law, economics and political science in debate and discussion about the implications of inequities in power, money and resources for social and health inequities, and what that means for policy and practice in Australia and internationally.
Experts in public health, economics, law and political science laid bare the current political determinants of health inequities. The symposium explored how inequities in power, money and resources affect people’s daily living conditions and ultimately their health.
Participants discussed what could be done to address health equity challenges through a range of policy areas including trade, taxation and social welfare. Importantly, the symposium was a call to action to challenge the status quo and to identify what can and must be done to improve health equity in Australia and internationally.
The starting point for the symposium discussions was that the inequities in health are socially produced. People’s health is influenced by their basic material resources, the level of control that they have over their lives, and the extent of engagement in decision-making and implementation processes.
These three aspects of empowerment are influenced by the political, economic and cultural characteristics of contemporary societies, which generate and distribute political power, income, goods and services between and within countries. The consequence of this for different social groups is the unequal exposure and access to – for example – good working conditions, affordable education and health care, sufficient nutritious food, and affordable quality housing.
These issues are very real in modern day Australia. Dr Andrew Leigh, Federal Member for Fraser ACT and author of Battlers and Billionaires; the story of inequalities in Australia, described the health inequities between the rich and poor, with the rich living an average of six years longer than the poor.
He noted the inequities that also exist in income: since 1975, a worker in the top 10th percentile of income has seen their wages rise by 59% whereas the wages for workers in the bottom 10th percentile has risen only by 15%.
People at the top of the socioeconomic scale want to access their superannuation at 60; lower income people are expected to wait until 70. Those at the bottom die six years earlier; that means six years less to access retirement savings.
One sees the inequity of it: someone working a desk job can access their superannuation at 60, whereas the person cleaning that office has to wait until 70. Thinking about equity puts public policy problems in a different light. Governments need to think beyond averages and consider the distribution.
Professor David Stuckler from the Department of Sociology, Oxford University and author of the book The body economic: why austerity kills highlighted the stark contrast in health and social outcomes when governments choose whether or not to look after their people in times of economic crisis.
How austerity kills
Following the Global Financial Crisis, people lost homes, jobs, and hope. Europe’s experiment with austerity is having health effects that are readily apparent. Greece was compelled to make budget cuts to meet targets set by the IMF and the European central bank. After the HIV prevention budget was slashed in 2010, HIV infections rose sharply, making Greece the only country to experience a resurgence of the disease that had been held at bay for decades.
A similar scenario unfolded in Thailand during the 1997 Asian financial crisis. The IMF pressured Thailand to make budget cuts, which saw HIV programs slashed by 50%, with a subsequent surge in mortality rates. The IMF acknowledged in 2012 that its austerity conditions had harmed Thailand three times more than the organization had previously assumed.
When Iceland’s banks failed in one of the biggest banking collapses in history, it turned to the IMF, which prescribed draconian budget cuts. Iceland instead devised an unorthodox plan to increase rather than decrease social spending and health care, enabling it to rebound from its economic crisis, whereas Greece languishes.
There is a strong evidence-based case to spend on health, education and social protection. Countries that have best weathered economic hardships have also had the strongest social safety nets and protections. The link between social protection and health is not merely a correlation, but a powerful cause and effect relationship across societies and over time.
How Australia runs its financial affairs influences the daily living conditions in which people are born, grow, live, work and age. These, in turn, affect how we feel, behave and engage on a day to day basis, the long-term stress that we experience, and the acute and chronic suffering of disease and ultimately death.
Dr Richard Denniss, Executive Director of The Australian Institute reminded the symposium that Australia has ample financial resources and some of the lowest taxes and debt of any country in the developed world.
However, governments continue to focus on deficits and debt reduction. Deficits can be reduced by increasing taxes, thereby increasing revenue, or by spending cuts. They usually opt for spending cuts, sometimes cutting taxes as well as spending on services, which hits poor people the hardest.
Super benefits – but not fairly
The symposium heard about the gross inequities in capital gains tax and superannuation in Australia. Australia is one of the lowest tax least indebted countries in the developed world. Australia has $700 billion in mineral resources, as opposed to 1.5 trillion in superannuation funds.
According to the Treasury, the top 5 percent of income earners get 30 percent of superannuation benefits, and the bottom 20 percent get none. People do not notice because it is in the form of a tax concession: it is the same as mailing a cheque for tens of thousands every month to each high income earner, and a check for zero to low income earners.
Dr Denniss reminded us that the Great Depression was ended by policymakers choosing to radically alter fiscal policy and spend their way out of it. The world is the way it is today because the people with the power to change it choose not to do so.
Power and governance was a recurring theme throughout the symposium. As the editor of the Lancet, Richard Horton noted recently “Health inequity is about power inequity: if we want to improve health, we must analyse power and challenge those with power.”
Issues of power were discussed by Professor Peter Drahos, Regulatory Institutions Network at the Australian National University. Drawing on sociological and political science theory, he deconstructed the dimensions of power into structure and agency.
Structure comprises institutional arrangements, laws, rules and norms, which can render certain actors weak or powerful. In an internationalised world, structural power tends to emanate more from global fora such as the International Monetary Fund and World Trade Organization, and less from individual countries.
Throughout history countries have used money and the economic power of access to their markets to coerce others during trade negotiations. For example the USA used its economic power to pressure countries during the Uruguay round of trade negotiations on intellectual property rights. The US economic power is partly because it is a large market, importing 12 percent of the world’s goods and 10 percent of services. The capacity of other countries to mobilize economic coercion is limited. This is structural power on the part of the US.
Different forms of power
In addition to structure and hard power, there is agency and soft power. Agency relates to individuals and groups with capacity for planned action that can influence outcomes.
Professor Drahos reminded the symposium that the world is not as structurally determined as it was in the past. It is more fluid, and can be influenced with soft power.
He highlighted four key strategies for how soft power can be used to influence society in a way that improves health equity:
- Information is power and technical expertise matters but it needs to be focused at critical nodal points for maximum effect.
- Circles of consensus: those seeking change can build coalitions and networks.
- Forum shifting: use multiple fora to communicate ideas and influence agendas.
- Framing, or the way something is presented can have a greater effect on choice than evidence.
The symposium concluded with an expert panel discussion titled “How can trade and fiscal policies improve health equity”, which was facilitated by Paul Barclay, Big Ideas, ABC Radio National.
Panel members included Dr Deborah Gleeson (LaTrobe University), Prof David Stuckler (Oxford University), Professor Matthew Rimmer (ANU) and Professor Sharon Friel (ANU). ‘
The panel discussion was broadcast on Radio National – listen here.