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Health as if everybody counted blog

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Is concern about economic inequality going mainstream?

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
User is currently offline
on Tuesday, 19 February 2013
in CHNET-Works!

In a previous posting, I recommended a recent report on economic inequality in The Economist. In its special reports, at least, that magazine has a strong track record of ‘telling it like it is’. Back in 2006, for example, a special report on the world economy admitted that “the usual argument in favour of globalisation–that it will make most workers better off, with only a few low-skilled ones losing out–has not so far been borne out by the facts. Most workers are being squeezed.” And in 2011, The Economist pointed out that Congressional Budget Office figures from the United States support the contention “that the people at the top have made out like bandits over the past few decades, and that now everyone else must pick up the bill.” Now, more evidence suggests that concerns about economic inequality are moving into the mainstream, in Canada and elsewhere.

One of the Occupy movement’s accomplishments has been to direct attention to the growing gap between people at the very top of the income distribution in societies like Canada and the United States – the one-percenters – and the rest of the population. In January 2013, Statistics Canada released updated figures based on tax return data about Canada’s one percenters: based on income, they were those with annual personal incomes above $201,400. These figures refer to individual incomes, not family incomes; a University of Regina Study published in 2012 found that in 2009, the top one percent of “economic families” as defined by StatsCan had wage and salary income (i.e. not including interest, dividends or capital gains) of more than $271,800. The two sets of figures are not directly comparable, since they are based on two different data sets and the Regina figures are restricted to labour income. Yet another analysis, which included all forms of income, identified the top one percent of households (the definition is similar to that of economic families, but not identical) as those with incomes over $366,717 in 2010. More strikingly, the top one percent of households in this analysis accounted for 10.5 of all the income earned by Canadians. All these data refer to income and not to wealth, which most researchers agree is more unevenly distributed than income.

Considerable ideological distance separates Occupiers from the business-oriented Conference Board of Canada, yet the Conference Board has recently expressed considerable concern about Canadian inequality. In an online report card that compares Canadian social policy with that of 16 other high-income countries, it notes that Canada “is not living up to its reputation or its potential” and that “Canada’s ‘D’ grade on the poverty rate for working-age people, and its ‘C’ grades on child poverty, income inequality and gender equity are troubling for a wealthy country.”   The report offers links to more detailed information on various specific domains, such as child poverty (where Canada ranks 15th, ahead only of Italy and the United States); working-age poverty (again, we are 15th, ahead only of Japan and the United States, and not by much); poverty among the elderly (one of Canada’s social policy success stories, but now arguably imperiled by population aging and the fact that only one in four private sector workers has a pension plan); and income inequality (rising, with a “concentration of income among the super-rich”). Despite Canada’s overall “B” grade on social indicators, which cover much more than income (and do not address concentrations of wealth), the overall pattern of increasing inequality is clear. So is the fact that other countries do much more than Canada to reduce income inequality by way of taxes and transfers.  

Perhaps an even less likely source of concern about inequality is the World Economic Forum. Yet the eighth (2013) edition of a Forum report on “global risks,” based on “an annual survey of over 1,000 experts,” estimates that severe income disparity is the most likely of any of the 50 risks studied to occur over the next ten years, and that a major systemic financial failure is the risk with the highest potential impact. (The economic processes driving inequality and magnifying financial risk are of course closely connected, as we know from the events of the last five years.) The simple fact that the report’s authors consider severe income disparity as a global risk says a lot. In the global frame of reference, further gloom about prospects for reducing health inequity comes from the fact that water supply crises are rated as having both high likelihood and high impact, and food shortage crises are rated as having high impact although lower likelihood.

Almost five years after the release of the report of the Commission on Social Determinants of Health, it should not be necessary to revisit the connections of economic inequality and its consequences with health inequity. (An earlier posting, which has drawn more hits than any other in this series, addressed some of these connections.) It’s also worth emphasizing that reducing inequality is not about the ‘politics of envy’ or some similar construct. It’s about the near impossibility of healthy life near the bottom of the economic ladder even in the richest countries in the world; the ubiquity of socioeconomic gradients in health; and the fact that if societies want to invest more in policies that equalize opportunities to live a long and healthy life, the resources will have to come from somewhere. If not from those who have captured a very substantial portion of the gains from the pre-2008 period of sustained economic growth, then from whom? As US President Obama famously and correctly said, this is not class warfare; it’s math.

There is also a more subtle political point. Once economic inequalities have become sufficiently extreme, the idea of a ‘common future’ may become an illusion; the gap between the rich and the rest will simply be too wide, whether we define the rich in terms of the top one percent, five percent or even 20 percent. The problem is that we cannot locate this threshold (if it exists) in statistical terms, and will only know that we have crossed it once we have done so. Writing in the US context Robert Reich, later a cabinet secretary in the Clinton administration, raised this possibility more than 20 years ago in an article on “the secession of the successful” – at a time when economic inequalities were less extreme than they are today.   It remains to be seen whether heightened concern about those inequalities today can have an impact on social policy and reducing health inequity, or whether secession of the successful is already a fait accompli.

Related resources

“The global economy is disequalizing,” interview with The Broker (Netherlands) as part of an ongoing series on inequality.

Richard Wilkinson, “How economic inequality harms societies” (online video)

Messages on inequality, from sources far and near

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
User is currently offline
on Sunday, 28 October 2012
in CHNET-Works!

Taking health inequity seriously requires direct engagement with increasing economic inequality and the underlying macro-scale economic processes.  A remarkably thoughtful overview of those processes is provided by Zanny Minton Beddoes in a recent special report in The Economist.  (At this writing, the special report is still open access; get it while you can.)   Despite obligatory genuflection to the economic theology that economic inequality reduces ‘efficiency,’ Beddoes focuses on the destructive consequences of rising inequality (especially at the top of the economic pyramid) and on how public policy can and should respond.  Everyone interested in the future of population health should read her report, which is especially scathing on how various US policies actually magnify inequality.  Against the background of that country’s imminent money-driven elections it is worth quoting her concluding critique of the Obama government’s approach as “just a laundry list of small initiatives.  [New Deal initiator Franklin] Roosevelt would have been appalled at the timidity.  A subject of such importance requires something much bolder.”

Closer to home, on October 24 a commission that had been asked to review social assistance in Ontario released its report – with an almost total absence of media attention apart from the Toronto Star.  (Readers and viewers to whom social assistance might actually matter are not highly valued by the managers of commercial media, but even the CBC missed this story.)  Among other findings, the report recommended an immediate increase of $100 per month to “the lowest rate category, single adults receiving Ontario Works, as a down payment on adequacy while the system undergoes transformation.”  This report should serve as an overdue starting point for moving public health advocacy beyond tanning beds, Red Bull and salt to consider underlying distributional issues such as income adequacy.  We know, for example, that eating a healthy diet while keeping a roof over your head in much of Ontario is arithmetically impossible if you are paying market rents.

Will the various communities of researchers, practitioners and advocates concerned with health equity engage with these recommendations, taking advantage of the opportunity offered by the prospect of political change in Ontario?  What kinds of followup will be initiated by Medical Officers of Health, and by university- and hospital-based researchers, who are far removed from having to choose between paying the rent and buying fruits and vegetables or paying their children’s dentist?  We shall see.

 

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Fostering blissful ignorance about poverty?

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
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on Monday, 23 April 2012
in CHNET-Works!

Many readers of the federal budget will have missed the decision to shut down the National Council of Welfare, a small and independent-minded unit of the Government of Canada that since 1962 has been a source of information about the extent and depth of poverty and inadequate social provision in Canada. With its demise, a resource for advocacy on social determinants of health has been lost. It is still possible to use the Council's site to access an interactive map showing that (for example) inflation-adjusted social assistance incomes in Ontario are no higher than they were in 1986. And the ground-breaking 2011 study on The Dollars and Sense of Solving Poverty is still available. To quote just one provocative finding from its summary: "The poverty gap in Canada in 2007—the money it would have taken to bring everyone just over the poverty line—was $12.3 billion. The total cost of poverty that year was double or more using the most cautious estimates," although these are admittedly incomplete and fragmentary. The public health community would be well advised to act fast and download the Council's publications before they are consigned to the memory hole.

Another disturbing set of findings about economic insecurity comes from the latest annual survey of Canadian family finances (families of two or more people) from the Vanier Institute of the Family. Some of the study's findings will be familiar: for instance, after-tax income of the poorest 20 percent of Canadian families (two or more people) rose by just 19 percent between 1990 and 2009; the incomes of the richest 20 percent rose by 35 percent. We know from other studies that the trend toward increasing inequality is even more extreme when we look only at the top one percent of the Canadian income distribution: 246,000 people with an average income in 2007 of $404,000 who accounted for 32 percent of all the growth in incomes between 1997 and 2007.

blissful-pic-1Source: Department of Finance Canada.
This illustration is taken from an official Government of Canada publication;
it is used here without Government of Canada endorsement.

Other Vanier findings are less familiar, and more disturbing. For instance, Canada's official unemployment rate in early 2012 would have been 9 percent, rather than 7.6 percent, if the participation rate had been as high as before the recession; 'discouraged workers' who have given up the search for work are not counted as unemployed. And although the overall insolvency rate (bankruptcies and proposals to creditors per 100,000 population) dropped slightly in 2010 and 2011, insolvencies among people aged 55-64 increased by almost 600 percent between 1990 and 2010. Among people over 65 they rose by 1747 percent. This suggests that one of the signal accomplishments of postwar Canadian social policy, cutting the percentage of poor seniors to one of the lowest in the OECD, may be in danger.

As noted in an earlier posting, addressing the possible consequences for population health of such trends unavoidably raises questions of public health ethics. One approach would be to set up an elegant prospective epidemiological study, wait 10 or 15 years, and hope that the casualties, their survivors, or someone are still interested in the answers. Another approach, adopted by the Commission on Social Determinants of Health, is to act on what we now know or can presume with a high degree of confidence, drawing on various sources of evidence and research traditions. So far, our political leaders – and, it must be said, a few of our public health colleagues – seem more interested in punishing the poor and economically insecure, or just ignoring them, than in equalizing opportunities to lead healthy lives. Inequality trends are important for many reasons, but one is that they give the lie to claims that such equalization is unaffordable.

Life A.D. (After Drummond), Part 2: Structural adjustment for Ontario?

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
User is currently offline
on Monday, 19 March 2012
in CHNET-Works!

On February 15 the Government of Ontario released a far-reaching report on reorganizing public service provision in response to the budget deficits that followed the post-2008 recession. The central theme of the report was that “just to meet the government’s goal of a balanced budget seven years hence, the government will have to cut even more deeply from its spending on a real per-capita basis, and over a much longer period than the Harris government did in the 1990s, without the option of an immediate deep cut in social assistance rates” (p. 121). Ontarians will remember that the Harris government cut those rates by 21 percent almost immediately after coming to power. Despite some increases, in 2009 they remained (depending on the type of household receiving assistance) between 17 and 38 percent lower than in 1996 after adjusting for inflation, according to the National Council of Welfare.

The Commission says much that is important and worthwhile about health care in Ontario, starting with the recognition that Ontario does not really have a health care system, but rather “a series of disjointed services working in many different silos” (p. 152), and that Ontario health care does not perform well based on international comparisons. Well grounded hypothetical descriptions of patient trajectories spotlight shortcomings in health care performance (pp. 153, 159, 164), measured against what ought to happen as a matter of routine. The report makes a compelling case for improving coordination among the silos, through measures both large and small, and making the non-system’s current approach to complex and chronic conditions (the management of which is also very costly) more effective – all of which should have been accomplished long ago, for reasons unrelated to cost. The report urges “aggressive” negotiation with the Ontario Medical Association on compensation (p. 189) – bringing to mind Robert Evans’ long-standing insistence that "cost containment is in aggregate income control, by definition" – and, perhaps more importantly from a health policy perspective, insists on moving “critical health policy decisions out of the context of negotiations with the Ontario Medical Association and into a forum that includes broad stakeholder consultation” (p. 185).

life-ad-part-2-pic-1 A leaner, meaner Ontario: Locked out workers at the Electro-Motive plant in London, Ontario, January 2012. Photo: CAW Media; reproduced under a creative commons licenceAlthough such changes are overdue, hard questions remain unanswered. The Commission proposes to strengthen Ontario’s 14 Local Health Integration Networks (LHINs, the province’s variation on regional health authorities) so that they can improve coordination among silos and health care management in general. But can these entities accomplish such critical tasks as ensuring that best practices are rapidly adopted province-wide? What are the pitfalls of specifying that the accountability of LHINs, currently with no requirements for public participation, is to the Ministry of Health, as per the Commission’s recommendations, rather than to the clients they serve? And the proposed transformation of an organization called Health Quality Ontario, now an advisory body, into “a regulatory body to enforce evidence-based directives to guide treatment decisions and OHIP [Ontario Health Insurance Plan] coverage” (p. 186) could be a dream or a nightmare. Since “nothing works” is a fiscally attractive conclusion, we can imagine immense pressure to compromise transparency and scientific integrity, and ignore standard of proof issues, in the interests of cost containment.

The report further acknowledges the importance of social determinants of health: “Socio-economic factors such as education and income explain 50 percent” of population health outcomes, and the physical environment another 10 percent (p. 132) although the percentages, drawn from a Canadian Senate Committee report, appear to be guesstimates and no supporting evidence is provided. This acknowledgement is ironic, to say the least, given what the Commission has to say about social policy.

The Commission’s proposed 0.5 percent limit on annual spending growth for all social programs means that no increase in social assistance rates is envisioned, despite the decline from mid-1990s levels. In fact, the Commission proposes slowing the provincial takeover of social assistance costs downloaded to municipalities during the Harris era (p. 483), prolonging the nineteenth-century practice of leaving “poor relief” to local governments. (Unfortunately, some surveys find that nineteenth-century attitudes toward economic hardship remain widespread.) No new resources are contemplated for social or affordable housing, despite the existence of multi-year waiting lists in much of the province. As the Toronto Star’s Thomas Walkom and a policy analyst for the Ontario Nurses’ Association have pointed out, despite Drummond’s long career as a professional economist, the report ignores the employment consequences of taking billions of dollars out of the provincial economy. Walkom predicts that implementation of the Drummond recommendations would cause unemployment in Ontario to rise to 11 percent by 2018, “even without another global crisis”. Poverty reduction is nowhere acknowledged as a legitimate goal or priority of government; indeed, the word “poverty” appears only six times in the text of the 562-page report.

To put this discussion into context: on Thanksgiving weekend in 2010, the Premier of Ontario was quoted by CBC News as urging Ontarians to donate to food banks, and in March, 2011 395,000 Ontarians relied on a food bank to feed themselves at least once. Rents and food prices are not going down. So the Commission has said to a significant proportion of Ontarians: forget about any hope that your opportunities to lead a healthy life will improve before 2017-2018. The cupboard is bare.

But is it, really? In order to answer this question, we have to look at both the revenue side and the expenditure side of Ontario’s public finances, in historical perspective. The Commission itself emphasizes that “spending is neither out of control nor wildly excessive. Ontario runs one of the lowest-cost provincial governments in Canada relative to its GDP and has done so for decades” (p. 5). Further, it notes that the provincial treasury’s “own-source revenues” – taxes and user fees collected by the province, as distinct from revenues received from federal transfers – as a percentage of provincial Gross Domestic Product (GDP) were considerably lower (13.65 percent) in 2010-2011 than in 1999-2000, midway through the Harris era (15.9 percent). Although precise comparisons are impossible, this is consistent with estimates by the Canadian Centre for Policy Alternatives that, every year since the start of the century, provincial tax cuts (mainly in personal income tax rates) begun in 1995 have reduced revenues by between $10 billion and almost $18 billion relative to the revenues that would have been received if tax rates had remained at their 1994-95 levels. In other words, well before the post-2008 and its undeniable effects on revenue stream, the province’s fiscal capacity was suffering from major self-inflicted wounds.

life-ad-part-2-pic-2

The Commission was instructed not to consider the possibility of raising taxes. However, as shown in the illustration, if we accept the Commission’s estimates of the growth of the provincial economy and the spending restraints incorporated into the Drummond Commission’s “preferred scenario,” but are willing to consider tax increases sufficient to return own-source revenues as a percentage of provincial GDP to their 1999-2000 level by 2017-2018, we see that the budget is in surplus by more than $22 billion. Stated another way, if the province were to pursue what Hugh Mackenzie of the Canadian Centre for Policy Alternatives has called “an adult conversation about the public services we need and the revenue we are going to have to raise to pay for them,” the provincial budget could be balanced in the target year while making available $22 billion more than the Drummond projections for program spending. According to one commentator the province is not even planning pre-budget legislative hearings, thus making it difficult to start such a conversation. Indeed, the Commission’s description of the provincial budget as “a powerful educational tool” (p. 13) suggests that most of the key immediate decisions have already been made. Its proposal for a centralized expenditure management process involving the Premier’s Office, Cabinet Office and Ministry of Finance that “should stay in place for at least several years” warns of little room for debate in the future (pp. 140-141). Shouldn’t public finance be a matter for public debate?

At several points in its report the Commission underscores the difficulties created by the government’s refusal to consider tax increases, anticipating (for instance) a $38.5 billion shortfall in financing planned and necessary public transit investments in the Greater Toronto and Hamilton Area. For those who can afford to drive everywhere, this means only the inconvenience of more traffic jams; for those who can’t, it may seriously limit mobility … and of course that foregone investment also means lost employment. The Commission states that its budget-balancing strategy would mean “tough decisions that will entail reduced benefits for some” (p. 69) – although not, it seems, for everyone. On the matter of soaring compensation for people like Drummond’s fellow commissioners at the top of public sector salary scales, the report says that “focus must remain on the larger picture, which is the government’s need to get the right people into the right positions at a cost that is both compatible with its fiscal circumstances and appropriately aligned with private-sector compensation” (p. 138). Well, workers at Electro-Motive Diesel’s London, Ontario plant know about that kind of alignment: they were locked out after refusing a 50 percent pay cut before the parent company closed the plant and moved the work to Indiana. In the Ontario of tomorrow, it seems that what Saskia Sassen calls “the savage sorting of winners and losers” characteristic of the contemporary global marketplace is to be accepted, and indeed welcomed.

life-ad-part-2-pic-3

Any assessment of the Commission’s implications for population health (and never was there a better example of the need to apply health equity impact assessment to macro-scale economic and social policies) should keep this in mind. As pointed out by (among others) economist Erin Weir of the United Steelworkers, there is quite a bit in the report that those of us committed to social justice can support. At the same time, the report is about much more than public finance. Effectively, it recommends for Ontario a variant of the structural adjustment programs* of marketization and social policy retrenchment demanded by the International Monetary Fund in return for loans enabling low- and middle-income countries to reschedule their debts to external lenders, in the process creating widespread economic hardship and seldom leading to long-term economic improvements. Equity, for both the IMF and the Drummond Commission, was an unaffordable luxury. Against a background of worsening economic disparities that would be further magnified in the future envisioned by the Commission, what is the future of health equity in Ontario? And who will decide?

 

* For readers unfamiliar with the history of structural adjustment, two excellent recent review are Babb, S. (2005), The Social Consequences of Structural Adjustment: Recent Evidence and Current Debates, Annual Review of Sociology, 31, 199-222 and Pfeiffer, J. & Chapman, R. (2010), Anthropological Perspectives on Structural Adjustment and Public Health, Annual Review of Anthropology, 39, 149-165. Unfortunately, so far as I know neither of these is available on an open-access basis.

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