Thursday, August 28, 2008

WHO report on Health Inequality: economic detox needed

Prof. Sir Michael Marmot's report on poverty and health: he says that a "toxic combination of bad policies, economics and politics is in large measure responsible for the fact that a majority of people in the world do not enjoy the good health that is biologically possible".

This is not new. Marmot established this point in his seminal research on the Civil Service more than a decade ago, and he has been backed up by work of others, notably Richard Wilkinson. I know, because I dealt with it in my book, Bills of Health back in 1996.

The question is not how much more research do we have to do, but what do we do about it? How do we de-toxify the economic system?

Under the captialist system (and, no, I am not a Marxist, I am a Green*), especially the Anglo-Saxon version, the rich get richer and the poor get poorer. Why? Because new money is created by giving loans at interest. If you are rich, you can loan out, and your savings grow with interest. If you are poor, you may have to borrow, and you have to pay back the loan and the interest. So we get divergence between the fortunes of the rich and poor.

The benefit system amplifies this problem. If you are on unemployment benefits (JSA), you lose your benefit the moment you find a job. If you are unskilled and on housing benefit, this often means that getting a profitable job is impossible. To its credit, Labour has addressed this with the Working Tax Credit, but it clearly is not actually working, because divergence has increased under Labour, to their eternal shame.

Citizen's (or Basic) Income is a far better, smoother way of breaking the poverty and unemployment traps created by our dysfunctional benefit system. Or if this frightens the horses, then the Green Wage Subsidy is a way of getting there without having to win the "What about the liggers?" argument.

As for the loan interest aspect, Government used to issue the money. It was called seignorage. Now the power of issuing money has been privatised, so that lending institutions issue 97% of the new money (yes, the Bank of England still gets to issue the notes and coins, 3% of the money). The banks and lenders got greedy, and made some stupid loans, leading to the present credit crunch. Clearly there is a need to rein them in, and take back at least some of the power to issue money away from the moneylenders and give it back to the government, on behalf of the people.

This will seem all a bit radical to many, including people in the green party who should know better. Many still think that bankers are kindly old buffers who look after your money, by lending the same money out again to people who need it. This is not the case. Lending institutions CREATE money. In fact the money sloshing around in the world is doubling every 5 years. Anything that has a doubling rate of growth is unsustainable, because it is in exponential growth. If you are unfamiliar with this concept, try folding a sheet of newspaper in half, then half again, and see hoow many times you can do it. Not a lot.

We will hear more of this as the recession deepens and spreads.

*Greens advocate a mixed economic system with a guided market

1 comment:

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