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Thursday, May 23, 2013

'Recessions Hurt, but Austerity Kills': Study

greek austerity protest October 18 2012

An international study on recessions and governments' responses to them has found that cuts to healthcare systems prompted by fiscal austerity are making matters far worse—for both governments and society.

David Stuckler, a sociology professor at Oxford University and co-author of the book "The Body Economics," told CNBC on Thursday that responses to recessions had not only been inadequate and counter-intuitive but had caused widespread deaths because of a reduction in access to healthcare and medicines.

"Austerity in health is a false economy, these epidemics are going to cost a lot more to clean up than they would have cost to prevent in the first place," Stuckler told CNBC Europe's "Squawk Box," citing research he conducted with physician-epidemiologist Sanjay Basu.

"We've looked at different types of fiscal multipliers and found that public health has one of the largest fiscal multipliers of up to 3 euros return for every one euro invested, whereas other forms of spending such as defense and bank bailouts tend to flow out of the economy leading to trade deficits."

Stuckler's comments come as European leaders meeting in Brussels on Wednesday appeared to be turning away from austerity policies by announcing programs to boost employment and growth. The reversal may be too late for some healthcare systems such as Greece's, which has seen money for some departments cut by up to 50 percent.

(Read More: Depression, Suicides Rise as Euro Debt Crisis Intensifies)

Stuckler's research adds to a growing body of evidence of rising suicides, alcoholism and disease in parts of Europe that have been hard hit by fiscal austerity. "Recession hurts but austerity kills," Stuckler said, citing Greece as "one of the worst cases in the middle of a public health disaster."

Stuckler's research found a 200 percent increase in HIV infections in Greece after HIV-prevention budgets were cut as part of a 40 percent reduction in the Greek healthcare budget. Malaria too has returned to southern Greece,though it had previously been eradicated in the 1970s, Stuckler said.

Recent history should also be a warning to Europe's leaders. Stuckler and Basu found that one million deaths in Eastern Europe during the 1990s could be attributed to austerity and government divestment programs. In the U.S. too, healthcare cuts have in the past proven dangerous, according to the authors.

(Read More: Hippie Commune Thrives as Europeans Tire of Chaos)

"New York officials in the 1990s cut their anti-Tuberculosis budgets only to then be faced with a drug-resistant outbreak of TB that ended up costing $1.2 billion," Stuckler said. "They learnt the hard way."

By CNBC's Holly Ellyatt. Follow her on Twitter @HollyEllyatt.

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READ THE ORIGINAL POST AT www.businessinsider.com