Blogs are opinion pieces and reflect their author’s views
Challenging Austerity Policies as the Solution for Economic Growth: Why People Matter More than Deficits
Written by: Katrina Milaney
The COVID-19 pandemic has challenged us in many ways, most obviously with the health and economic realities of living with a ‘new’ and deadly virus without an effective treatment. Less understood are the short and long term impacts on people who are or will become dependent on social and health services to deal with the emotional ‘fall-out’ of this emergency.
Social issues typically increase during a crisis. Calls to the Calgary Distress Center and 211 for emergency supports, information and referral increased by 63% in the first half of 2020 as compared to the same time in 2019. The top issues for Calgarians related to COVID-19 are anxiety, depressed mood, and loneliness/isolation and family relationships. There has been a 20% increase in calls about suicide and overdoses across Canada have increased between 60-300% since March.
There is a growing body of evidence that investing in social programs like affordable housing, health and social services saves lives, reduces costs and strain on emergency public services.[i] The pandemic, combined with the loss of revenues resulting from the economic downturn prior to COVID-19, means a ‘perfect storm’ is brewing. Demand for social services is increasing while funding for many of these agencies is at risk.
Contemporary approaches to stimulate economic growth often rely on funding cuts. Sometimes called austerity policies, these are political-economic strategies that prioritize reduced deficits while cutting investments in social programs. However, many economists argue that austerity, as the governing idea ‘of the moment’ during economic crisis, does not support growth, that boom times, not recessions are the right time for cuts. Some argue that they are unjust or unfair because the result is that people in poverty, living with disability, lone-parent families and people with mental health issues and addictions are made more vulnerable because they are often reliant on government supports. People with stable or higher socioeconomic status are largely unaffected because they have more wealth to begin with. Some even argue that austerity policies are a form of discrimination and structural violence because they do more harm than good, particularly towards people who are socially and economically vulnerable.[ii]
Results from a study by the Peterson Institute for International Economics, showed no support for the argument that austerity is good for economic growth. Another study by the UN’s Department of Economic and Social Affairs showed that austerity exacerbates income inequality and the ‘costs’ are carried primarily by low income people. [iii]Applying an austerity approach when citizens, businesses and social service agencies are already strained, will not make things better. We will see a dual public health crisis, COVID-19 and continued increases in domestic violence, poverty, suicides and overdoses.
Austerity policies mean priorities have to emerge and decisions have to made about where and what to cut. They are values-based, meaning decisions about who and how to support, are ideological. If we agree with austerity approaches that means we agree that some people are more important than others. Historical evidence of cost saving strategies like cuts to funding for affordable housing, meant to save money, failed. The result was increased rates of homelessness and increased demand for high cost and ineffective responses like emergency health care and policing.[iv] The impetus behind the de-institutionalization movement was to improve access to inclusive community–based care and to save money. However, as institutions were closed, community-based alternatives were not added. The result has been a number of people with very complex mental health issues being left without care, many relying on homeless shelters as their only option for support.[v] The implications of austerity policies actually increase costs and force people into a daily struggle for survival.
Prior to COVID-19 provincial spending was slated to be reduced by $610 million including cuts to health care, social services and post-secondary education. The economic losses associated with COVID-19 have increased deficits and challenged provincial plans for economic growth. If future plans include increased cuts in the wake of COVID-19, issues for vulnerable groups and strain on emergency responses will likely increase.
Mark Blyth is a Scottish-American political scientist. He grew up in the United Kingdom and was poor, his family dependent on government welfare but he never went hungry and was never homeless. He grew up during a time when social housing was widely available, he had free lunches at school and a free education. He is a “proud welfare kid” who became a professor in international political economy at Brown University. In his words, “austerity policies will ensure that the next ‘him’ will never happen” that opportunities for success will only be available to the already privileged and that “the world could use a few more welfare kids that become professors as it keeps the rest of us honest. ”[vi]
Relying on austerity as a strategy for economic growth will not work. These are unprecedented times with heightened global awareness of the impacts of unjust and discriminatory practices. We can and must ‘do better’. This is not a call for uncontrolled spending – rather a call for spending that has evidence behind it to show that in the long run, it is better for health and wellbeing and actually less expensive than austerity approaches that assume that investing in our most important assets – our people – is a bad idea.
It is imperative that we question and challenge how political decisions that have a major impact on people’s lives prioritize money over people, particularly when the evidence shows the intended outcomes will likely not be realized.
[i] https://www.mentalhealthcommission.ca/English/document/24376/national-homechez-soi-final-report
[ii] http://oro.open.ac.uk/50406/
[iii] http://eprints.lse.ac.uk/86268/1/lsereviewofbooks-2017-11-06-book-review-the-violence-of-austerity.pdf
[iv] https://www.homelesshub.ca/SOHC2014
[v] https://www.policyschool.ca/wp-content/uploads/2018/02/Falling-Through-The-Cracks-Milaney-FINAL-2Williams-Dutton-final.pdf
[vi] Mark Blyth, Austerity: The History of a Dangerous Idea. Oxford University Press
Katrina Milaney, PhD is a Research Fellow at The School of Public Policy and an Associate Professor in Community Rehabilitation and Disability Studies, University of Calgary