The Campaign To Prevent Government Shrinkage Turns Hysterical

In case you missed it, Monday's New York Times ran an op-ed by David Stuckler and Sanjay Basu entitled "How Austerity Kills."  The very long (for an op-ed) article occupied fully two-thirds of the real estate on that day's op-ed page.  Stuckler and Basu have just come out with the new book "The Body Economic: Why Austerity Kills," set to issue next week from Basic Books.

Who are Stuckler and Basu, you ask?  According to the description in the Times, Stuckler is "senior research leader" at Oxford, while Basu is "assistant professor of medicine" at Stanford.  In other words, they are wannabe big-time academics badly in need of a good dose of publicity to give a jolt to their careers.  No better way to get that than to start with the pet project of the New York Times ("government spending must never be cut!!!!!") and take it to a new level of hysteria.  "If you touch even one dime of the spending, you are killing the babies!!!!!!!"  Surely the Times will give us some valuable real estate to publicize that!  And they were right.

Before getting to the actual S&B article, we should note that there is a rather obvious problem with the thesis, which is that the most successful economies are consistently those with the lowest levels of government spending as a percent of GDP, and also that the wealthiest economies are the ones with the best health results.  Thus we have the phenomenon of Singapore and Hong Kong, with government spending at 17% and 19% of GDP respectively, seeing their per capita GDPs soar up above that of the U.S., which has allowed its government spending (all levels) as a percent of GDP to grow from the mid-30s to 42% over the past decade and has watched economic growth stall.  Presumably everybody in Singapore and Hong Kong must be dead?  Or consider the comparison of Italy (government spending 50% of GDP) and adjacent Switzerland (government spending 34.7% of GDP).   According to the most recent World Bank data, the life expectancy in Italy in 2010 was 81.7 years, but Switzerland was 82.2 years.  Not much difference, but still what you would expect -- Switzerland is wealthier!  (By the way, Singapore is 81.6 and Hong Kong is 82.9.)

So how exactly would it harm Italy to go from spending 50% of GDP to 34.7% like Switzerland, or under 20% like Singapore and Hong Kong?  Or excuse me, not just harm Italy, but actually kill people, as S&B are explicitly claiming?  If austerity "kills" people, shouldn't Switzerland have a dramatically higher death rate?  Well, according to S&B, you must find the answer by turning to the critically important anecdotal evidence.

EARLY last month, a triple suicide was reported in the seaside town of Civitanova Marche, Italy. A married couple, Anna Maria Sopranzi, 68, and Romeo Dionisi, 62, had been struggling to live on her monthly pension of around 500 euros (about $650), and had fallen behind on rent.  Because the Italian government’s austerity budget had raised the retirement age, Mr. Dionisi, a former construction worker, became one of Italy’s esodati (exiled ones) — older workers plunged into poverty without a safety net. On April 5, he and his wife left a note on a neighbor’s car asking for forgiveness, then hanged themselves in a storage closet at home. When Ms. Sopranzi’s brother, Giuseppe Sopranzi, 73, heard the news, he drowned himself in the Adriatic.

Wait a minute, he was 62.  I'm 62!  And I don't take government benefits of any kind.  I guess I must be dead too! 

Anyway, at least in this article, S&B don't provide anything other than the assertion that cutting government spending must worsen health outcomes because it's obvious.  They are like the famous 2002 Institute of Medicine study that claimed 18,000 additional annual deaths in the U.S. to people lacking health insurance -- a result now completely undermined by the results of the randomized study out of Oregon.  Needless to say, S&B don't give enough information in their article to enable you to assess their methodology, other than to be sure that there is no sort of randomized study involved., and that they have not bothered to check the rather obvious correlation in world data between lower government spending, greater wealth and higher life expectancy.  Frankly, it's pathetic.