Globalisation and health

1
Globalisation and health

• David Legge
• IPHU (September 2008)

2
Purpose

• To explore the links between population health
  and globalisation (understood as a global
  regime of economic governance)
• To draw some implications for policy-making and
  for strategy for health activists

3
Globalisation

• Global village
• communications, travel and transport
• health concerns communicable disease, tobacco,
  etc
• Global economic integration
• trading relationships
• money flows
• ownership and control
• Global regime of governance
• economic, political and military power

4
Globalisation as a particular configuration of
economic activity

• Changing patterns of production and trade,
  financial flows and investment, wealth
  accumulation and income flows
• global markets, global sourcing
• foreign direct investment
• role of transnational corporations
• increasing size and power of the financial sector
• changing patterns of production and employment

5
Globalisation as a regime of economic (and
political) governance

• Formal regulatory structures multilateral
  institutions and agreements (UN, WHO, IMF, WB,
  WTO)
• Empires, big powers and nation-states
• Transnational corporations (and peak bodies)
• Constituencies and social movements
• Information, knowledges and discourses

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Formal regulatory structures multilateral
institutions and agreements

• Bretton Woods Institutions
• IMF, WB and WTO
• United Nations system
• EcoSoc, UNCTAD and UNDP on the economic side
• WHO, UNAIDS, UNICEF on the health side
• Public private partnerships in health
• GFATM, GAVI
• Various conventions and agreements
• WTO agreements
• declarations on economic, political, cultural and
  social rights
• Kyoto Agreement
• International Health Regulations
• Framework Convention on Tobacco Control

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Empires, big powers and nation-states

• Governing the regulatory structures
• WTO negotiations
• regional FTAs and BITs
• Occasional direct disciplinary action
• trade sanctions
• covert destabilisation
• armed intervention
• Development assistance including funding and
  advice

8
Transnational corporations (and peak bodies)

• Growing in size, increasing number, carrying
  increasing proportion of global trade
• Global reach national sponsorship
• transnational but with domestic roots
• leverage also with other governments
• communication media (WEF, media, markets)
• Cases
• big pharma and IPRs
• water privatisation

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Constituencies and social movements

• Beyond the empire, the nation-states, the
  international institutions and the transnationals
• More diffused opinion hard to map but still
  influential
• commonalities, identities, alliances and
  solidarities
• nationality, ethnicity, class, caste, religion,
  language and race
• Features
• rise of global middle class
• fundamentalism (and the decline of modernity)
• social movements, eg environmental, womens,
• solidarity movements, eg Jubilee
• NGOs and CBOs

10
Information, knowledges and discourses

• Global power of
• information, eg health statistics
• research and analysis, eg DALYs
• discourses, eg comprehensive PHC,
  cost-effectiveness
• ideologies, eg neoliberalism, fundamentalisms
• The information organizations
• academic and research centres (eg Harvard SPH)
• discussion fora (eg DAC of OECD)
• media (eg reports, press coverage, etc)
• Cases
• role of the WB in promoting cost-effective
  packages of health interventions
• role of NGO websites in informing campaigns
  against big pharma

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Method

• Review the changing dynamics and regulatory
  strategies regarding the global economy since
  WWII
• Review some key reports, episodes, phases and
  struggles in global health in the context of
  changing strategies of economic regulation
• Trace some of the interplay between health issues
  and the wider debates and struggles regarding
  economic regulation
• Pull some themes from this review which might
  inform policy making and the practice of public
  health practitioners

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Framing the analysis an economic history

• 1945-1975 the long boom (and trickle down)
• 1975-85 stagflation
• 1975 onwards
• looming threat of over-production (post Fordist
  crisis) and
• rise of neoliberalism

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The long boom (1945-1975)

• The post-WW2 environment
• need for reconstruction (huge demand)
• increasing productivity (motor vehicles and cheap
  oil)
• The boom
• capital and labour brought together to make
  things and services that people need and are able
  to pay for
• increasing productivity (associated with new
  technology) frees up labour to make new things
  and to recycle wages as consumption (hence more
  profit, investment and sales)
• some trickle down to the poor (associated with
  Keynesian policies) and to the Third World
  (benefiting from trade opportunities associated
  with rapid growth)

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1975-85 - Stagflation and the failure of
Keynesianism

• Recession (cyclical slowdown on top of structural
  over-production)
• growing imbalance between productive capacity and
  market demand
• emergence of jobless growth weakening role of
  employment in recycling wages as consumption
• Emerging inflation
• Keynesian counter-cyclical policies deployed to
  contain the slow down ineffective (because slow
  down structural, not cyclical) but contribute to
  inflation because increase money supply and
  inflation without boosting employment and local
  business but at the cost of budget deficits and
  inflation
• goods and services for the Vietnam war sourced
  from outside the USA paid for in dollars (because
  of the international status of the dollar) flood
  the world with dollars (increase of global money
  supply) lead to inflation and depreciation of the
  dollar (leads to rejection of glold standard in
  1972)
• increasing price pressures as different players
  seek to defend against price increases fought out
  through various forms of monopoly power (oil with
  OPEC, labour with strong unions, brand names and
  protected technologies)

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Ascendancy of monetarism

• Monetarism defeats Keynesianism
• Monetarism argues for sole reliance on interest
  rates to control the business cycle
• and argues forfight inflation first (because of
  the costs to business of uncertainty)
• but increased interest rates used to control
  inflation further slows the economy at a time
  when it was already in recession

16
The Debt Trap

• The trap set
• 1973 OPEC price rise oil producers flush with
  cash deposited in banks
• Banks send salesmen around the world lending
  money at low and negative interest rates
  (negative after taking inflation into account)
• lending to corporations (but with government
  guarantee) in South America
• lending direct to governments in Africa
• The trap sprung
• 1980 interest rates escalate (peaking at 17 in
  the US in 1981) at a time of recession, imposing
  repayment and servicing burdens that many poor
  countries could not carry
• the 1980s as the lost decade

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From 1980 to the present

• Two parallel dynamics
• the continuing dynamic of the long boom (eg China
  and India)
• the continuing threat of post-Fordist crisis
  (jobless growth, structural over-production)
• Further contingencies
• climate change
• peak oil

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The threat of over-production (and
post-Fordist crisis)

• Where expanding (capital intensive) productive
  capacity (with stagnating employment growth)
  exceeds demand owing to
• saturated (mature) markets and/or
• markets with real needs but limited purchasing
  capacity
• Compensatory mechanisms which exacerbate the
  damage from over-production
• understood in the corporate world in terms of
  reduced profitability
• understood in the policy world as falling growth
  rates
• eliciting a range of corporate strategies and
  policy responses
• many of which exacerbate the risk of crisis

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Reduced profitability compensatory corporate
strategies

• New markets, new products and better marketing
  (incl commodification of family and community)
• Externalise costs (including to labour and to the
  environment)
• Increase market power (and capacity to increase
  prices)
• Consolidate production and increase market share
  through mergers and acquisitions
• Reduce wages (union busting, relocation)
• Replace well paid labour with technology
• These strategies will further reduce demand
  (reduce the role of employment in recycling wages
  into consumption)

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Slowing growth compensatory policy responses

• Outsource and privatise public sector service
  provision (new market opportunities)
• Deregulate environmental controls (converting
  natural capital into recurrent revenue)
• Force TW countries to open their markets and
  economies (under the slogan of free trade and
  open markets)
• Cut taxes (in particular, reduce corporate and
  executive tax burden) to compete for new
  investment
• Labour market deregulation (union busting) to
  reduce labour costs
• Force repayment of debt from TW countries
• These strategies further reduce demand

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Corporate and policy responses

• Exacerbate the over-hang of productive capacity
  over effective demand
• Postpone the crisis for the rich world (and rich
  classes)
• Other unintended adverse consequences
• destabilise global environment
• increase unemployment and inequality
• weaken family and community
• decay social infrastructure
• transfer value from South to North
• two worlds stratification (unified global
  bourgeoisie but fragmented global proletariat)

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So what prevents the crisis from engulfing the
economy globally?

• The situation is already critical for millions of
  poorer people (in rich and poor countries)
• trading regime which enforces the flow of value
  from poor to rich countries
• policy regime enforces the divide between those
  who participate in the new global economy and
  those who are excluded
• for these groups the crisis has already arrived
• However, continued growth globally (albeit
  slower) is supported through
• growth in China and India
• commodification of family, community, government
  functions (including health care)
• unsustainable exploitation of environmental
  services
• intensified transfer of value from periphery to
  centre (from South to North)
• growing role of debt in sustaining demand
  (recycling capital as consumption)
• global support for US consumption (supporting an
  over-valued dollar)

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Capital recycled as consumption through debt

• Profits and savings redirected as loans
• corporate rationalisation (in particular mergers
  and acquisitions) financed through corporate debt
  
• household consumption supported through
  increasing debt (recycling profit and savings as
  consumption)
• Increasing size, wealth, turnover and power of
  the financial sector (banks, insurance, etc)
• slowing growth so business redirects profit into
  financial sector (as portfolio investment and
  speculation) rather than into new direct
  investment
• new financial derivatives increase risky lending
  and speculation
• bidding up of asset values on borrowed or
  non-existent money (asset bubbles) feeds
  consumption expenditure (wealth effect)
• privatisation of pensions (superannuation)
  redirects billions from tax into savings held by
  private financial institutions (lent on for asset
  speculation and consumption)

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Global support for US consumption

• US trade deficit
• imports exceed exports
• US traders need to buy more foreign currency than
  they earn
• should lead to fall in value of dollar making
  US exports cheaper and imports more expensive
• But China, OPEC and other corporations and
  countries lend to the US (by buying US govt
  bonds) have
• kept the price of USD high
• kept US consumption spending high (and inflation
  low)
• kept the global economy ticking over
• Up until the sub prime mortgage crisis what
  now?

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Implications of sub-prime mortgage crisis

• Extensive use of doubtful collateral (securitised
  debt) to support borrowing revealed
• Credit squeeze banks withhold credit because of
  exposure
• Asset bubbles pricked widespread loss of
  wealth likelihood of recession
• Foreign holders of US Govt bonds sell off or stop
  buying (buy oil futures instead)
• Value of USD falls
• Threat of global recession because of
  significance of US market to exporters globally

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Continuing transfer of value from periphery to
centre (S ? N)

• Debt repayment
• role of IMF (and SAP / PRSP) as the enforcer
• Borrowing (high interest) while generating
  surplus (low interest)
• One sided trade liberalisation
• free trade in manufactured goods
• protectionism for IP and agriculture
• including escalating tariffs
• barriers to free trade in people
• Brain drain
• Declining terms of trade
• commodities vs manufactures

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Free trade - the key to growth and development?

• Free trade - a catch-all slogan obscuring
  countries and corporations manoevering for
  advantage
• Regulatory framework defining free trade
  discriminates in favour of the rich North
• Globalised free trade risks exacerbating the
  crisis of overproduction
• Protectionism, can have important benefits as
  well as drawbacks

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Alternative strategies of global economic
management

• (Really) free trade?
• Global Keynesianism (UNCTAD)?
• National self-sufficiency and regional (south
  south) trade (Amin)?

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Recap exploring the links between health
development and globalisation

• Purpose
• to explore the links between global health and
  the prevailing regime of global economic
  governance (globalisation)
• Method
• review some key episodes in global health
  policies since WW2 against the
• changing dynamics and pressures arising in the
  sphere of economic regulation
• interpreted in the light of the account presented
  of the global economy since WW2

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Bretton Woods to AIDS/HIV (1944-85)

• 1944 Bretton Woods (IMF, WB, GATT)
• 1950s Health development policy DDT, doctors
  and hospitals, population control
• 1955 Bandung Conference and birth of the
  Non-Aligned Movement (more confident TW voice)
• 1964 UNCTAD 1 (and G77) leads to call for New
  International Economic Order in May 1974
• 1973 First OPEC price rise
• 1977 last case of small pox
• 1978 Alma-Ata Declaration (PHC, reference to
  NIEO)
• 1975-80 Onset of stagflation, end of the long
  boom, emergence of monetarism
• 1981 escalating interest rates, debt trap sprung
• 1981 Selective PHC (the response to Alma-Ata)
• mid 1980s onwards IMF develops and imposes SAPs
• mid to late 1980s rise of AIDS/HIV
• 1987 Adjustment with a Human Face

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Break up of Soviet Union to Seattle (1985 - 2000)

• 1989 Break up of the Soviet Union
• 1991 USTR attacks Thai administration over
  pharmaceuticals policies
• 1992 WHO Health Dimensions of Economic Reform
• 1993 WB Investing in Health (virtuous cycle
  story, SAPs can be compatible with health
  development, new interventionism)
• 1995 WTO established
• 1995-98 OECD drive for MAI (note role of NGOs
  and internet but continuing push in WTO under
  Singapore issues)
• 1997 Sth African parallel import legislation
  passed, challenged (challenge defeated April
  2001, note role of MSF and other NGOs and
  internet)
• 1999 PRSPs implemented (new and improved SAPs)
• 1999 WTO in Seattle outrageous process
  dramatic protests
• Dec 2000 Peoples Health Assembly and Peoples
  Health Charter

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Treatment Action Campaign to Hong Kong (2000-08)

• April 2001 Defeat of big pharma in South Africa
  (note role of TAC, MSF and global social
  movements)
• April 2001 Norway Conference (WHO accepts
  differential pricing)
• June 2001 CMH Report (warning about health and
  stability virtuous cycle story repeated, CTC
  model and scaled up interventionism reliance on
  increased aid (and GFATM) and PRSPs)
• Sept 2001 9/11
• Nov 2001 Doha and the Statement on Public Health
  (especially Para 6 and compulsory licensing note
  rearguard action by US)
• Oct 2002 Bristol Myers Squib defeated in Thai
  DDI case
• Mar 2003 Invasion of Iraq (US unilateralism
  widespread opposition limits to US power
  apparent)
• Oct 2003 Negotiations for US Thai FTA commence
  (at risk compulsory licensing, data access,
  extended IPRs)
• Nov 2003 Cancun G21China stands up to G7
  deadlock over agriculture and Singapore issues
  US moves to focus on bilateral and regional FTAs
• Nov 2003 Miami FTAA-lite (US knocked back by
  Latin America)
• Jan 2004 IMF report critical of US twin deficits
• July 2004 Framework for Doha Round adopted
• Dec 2005 Hong Kong Ministerial
• Feb 2008 Sub-Prime Crisis breaks
• Sept 2008 Report of WHO Commission on Social
  Determinants

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Against TNA outcomes not inevitable

• Delegitimation of SAPs
• Jubilee 2000 and the Drop the Debt campaigns
• MAI-non!
• Doha 01 - TRIPS and access
• Cancun 03 advancing the demand for agricultural
  reform and resisting the Singapore issues
• Miami 04 resistance to US ambitions for a FTAA
• Arenas of struggle global regulators
• Delegitimation and the role of (globalised)
  popular movements
• Another World is Possible!
• Emergence of the PHM

TNA There is no alternative (attributed to M
Thatcher)
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Issues which link health policy with global
economic regime

• SAPs and nutrition
• TRIPS and access to drugs
• GATS and the building of comprehensive PHC
• Health and fair trade (with special and
  differential treatment)
• AoA and small farmers loss of livelihood (and
  health consequences)
• Policy reports (such as CMH) which deny (by
  obscuring) the disease burden created by the
  prevailing regime of economic governance

35
Another world is possible! Another US is
necessary

• We have
• reviewed the interplay of economics and health at
  the global level over the past 60 years
• interpreted the interplay of health and economics
  in relation to a particular story about the
  global economy over this time
• drawn some conclusions about strategy for global
  health activists
• Key conclusions
• recognise, celebrate, learn from and work with
  popular movements for health and economic justice
• keep global economic in/justice at the centre of
  health needs and health policy discussion