IN A NUTSHELL Editor's notePEAH is pleased to publish a manuscript here as the secont part of a two-part posting based on the new edition of Ted Schrecker and Clare Bambra's book How Politics Makes Us Sick: https://link.springer.com/book/10.1057/978-1-349-96127-6
Emeritus Professor of Global Health Policy, Newcastle University
By the same Author previously on PEAH: see HERE
Neoliberal Epidemics, part 2
“Deadly Austerity Past and Future”
I began an earlier post on PEAH by referring to a 2023 New York Times story, “The U.S. Built a European-Style Welfare State. It’s Largely Over,” which described the expansion of social protection during the early stages of the pandemic and the subsequent rollbacks. The US uses multiple official poverty measures. According to the most meaningful of these, the Supplemental Poverty Measure (SPM), as pandemic-related income supports were rolled back, the overall poverty rate rose from 7.8 percent of the population in 2021 to 12.4 percent in 2022, and the child poverty rate more than doubled, from 5.2 percent to 12.4 percent in 2022. This experience showed once again that poverty, deprivation and rising inequality – and therefore their consequences for health inequalities – are the outcomes of policy choices that could have been made differently. As US Senator Elizabeth Warren put it: “What we have today didn’t happen because of gravity. It happened because of a bunch of choices.” Many others have made a similar point.
Long before the pandemic austerity, under that name and others, was a key accelerant of inequality and insecurity. Low- and middle-income countries have long experience of International Monetary Fund-mandated programs of “fiscal consolidation,” which prioritize the reorganization of national economies around export earnings in order to pay foreign creditors, at the expense of domestic priorities such as education and health care.[1] After the recession that followed the financial crisis of 2007-2008, austerity became the economic policy flavour of the year throughout Europe, as structural adjustment “travelled north,” in the words of the leading authority on its global impacts. David Stuckler and Sanjay Basu, who wrote the first book on austerity’s destructive health impacts in the high-income world, correctly described it using the analogy of a large-scale clinical trial carried out on a non-consenting population. Wolfgang Streeck captured the underlying political dynamic by arguing that polities in Europe (and by extension elsewhere) were undergoing a long-term shift towards a “consolidation state” the top priority of which was “to make a state attractive for financial investment by making it clear to the financial markets that the state is in a position to service its debt,” with rapid and volatile increases in the cost of borrowing as the price of failure. In the US, legal scholar Michelle Wilde Anderson painstakingly described an “austerity experiment” leading to “a generation of new minimal cities,” sometimes (as in the case of Detroit) facing actual bankruptcy and consistently “focused on little more than the control of fire and violent crime.” Even crime control sometimes fell by the wayside, as the New York Times reported in a 2015 story about private fundraising to finance processing a backlog of more than 11,000 rape kits that local government in Wayne County (Michigan) could not afford to follow up.
Anti-austerity protest, Montréal, Canada, 2016. Credit: Exile on Ontario St. Reproduced under a Creative Commons 2.0 licence
The unexamined presumption here is the Thatcherite one that alternatives to austerity are simply ‘unaffordable’. In the words of Philip Gourevitch, again writing in the aftermath of the financial crisis: “The grip of capital lies in its ability to define the boundaries of acceptable discourse, to cast challenges as extremism.”[2] As with other invocations of limited resources, it is always necessary to ask why resources are scarce for some purposes while seemingly limitless for others, and what actors and institutions define the boundary between scarcity and abundance. Reducing the health-destroying effects of the inequality machine described in my previous post, and in Clare Bambra’s and my book on the subject, requires relentless advocacy for two challenges, in particular.
The first of these is increasing the progressivity of taxation and the fiscal capacity of governments not only by reversing regressive measures like the Trump administration’s tax cuts for the rich, but also by taxing today’s massive accumulations of wealth.[3] Thomas Piketty memorably observed in Capital in the Twenty-First Century that a temporary tax on private capital would have been sufficient to eliminate all outstanding European public debt[4] – a compelling alternative to the consolidation state. Taxing wealth in a world of hypermobile capital presents formidable problems of cross-border coordination, which is why a blueprint proposed by award-winning economist Gabriel Zucman is of special importance, even as such coordination would face intense (and quite possibly extra-legal) opposition.
A second challenge is revitalizing and expanding the public sector of market economies. This is if anything even more contrary to carefully propagated neoliberal wisdom, yet is essential to loosening the stranglehold of corporate capital identified decades ago by Eduardo Galeano: “Countries tremble at the thought that money will not come or that it will flee. …. If you don’t behave yourselves, say the companies, we’re going to the Philippines or Thailand or Indonesia or China or Mars.”[5] The international race to the bottom in corporate tax rates is just one manifestation of the consequences.
My own country, Canada, provides a useful case study of neoliberal evisceration of the public sector. At the start of the 1980s the federal Crown (that is, the people of Canada) owned, among other enterprises, one of the two national rail transport networks; the national flag air carrier; an integrated oil and gas producer and marketer; two aerospace manufacturing firms; and a world-class vaccine laboratory and manufacturer. By 1996 all had been sold off, along with provincially owned potash and uranium miners and many telecommunications firms. Fast forward to 2026, and the Canadian government plans to host a summit foregrounding opportunities for (mainly foreign) investors that has been described as “a little bit like a large public company holding their investor day.” Capital was playing a long game.
During a decade of savage austerity in the UK that disproportionately targeted low-income individuals and communities, the editor-in-chief of The Lancet wrote that:
Austerity is the calling card of neoliberalism. Its effects follow an inverse harm law—the impact of increasing amounts of austerity varies inversely with the ability of communities to protect themselves. Austerity is an instrument of malice. …. What is promoted as fiscal discipline is a political choice. A political choice that deepens the already open and bloody wounds of the poor and precarious. …. The task of health professionals is to resist and to oppose the egregious economics of our times.
Nearly a decade on, the task he described is more imperative than ever. Thanks to President Trump’s reckless Middle Eastern adventurism, at this writing global recession is a real possibility; meanwhile, as recent research shows, windfall gains from high oil prices accrue disproportionately to the very top of national income distributions. Even if recession is somehow averted, understandable demands for increased defence spending are likely to lend superficial legitimacy to intensified austerity on other fronts.
Even when not at direct risk of reprisal, health professionals are often uncomfortable engaging critically with macro-scale issues of economic policy and their distributional consequences. Especially in these times, if they fail to do so, then micro-scale or incremental interventions to reduce health inequalities, although implemented with the best intentions, are likely to be about as effective as sticking plasters on a sucking chest wound. Barring a dramatic (dare I say revolutionary?) change in the political environment, it is hard to avoid the conclusion that for many people, in many countries – perhaps for most people, in most countries – the worst is yet to come.
Notes
[1] The definitive reference is A. Kentikelenis & T. Stubbs, A Thousand Cuts: Social Protection in the Age of Austerity (Oxford: Oxford University Press, 2023).
[2] P. Gourevitch, “Choice and Constraint in the Great Recession of 2008,” in M. Finnemore and J. Goldstein (eds.), Back to Basics: State Power in a Contemporary World (Oxford: Oxford University Press, 2013), p. 211.
[3] The indispensable World Inequality Report 2026 (R. Gómez-Carrera et al., Paris: World Inequality Lab, 2025) points out that “fewer than 60,000 multi-millionaires control today three times more wealth than half of humanity combined” (p. 11 and Executive Summary Figures 2 and 3).
[4] T. Piketty, Capital in the Twenty-First Century (Belknap Press of Harvard University Press, 2014), pp. 541-544.
[5] E. Galeano, Upside Down: A Primer for the Looking Glass World, tr. M. Fried (New York: Picador, 1980), p. 175.