Tag Archives: austerity

How Austerity and Anti-immigrant Politics Left Italy Exposed

The Corona Virus & Immigration

Dispatches From the Edge

Mar. 25, 2020

 

As the viral blitzkrieg rolls across one European border after another, it seems to have a particular enmity for Italy. The country’s death toll has passed China’s, and scenes from its hospitals look like something out of Dante’s imagination.

 

Why?

 

Italy has the fourth largest economy in the European Union, and in terms of health care, it is certainly in a better place than the US. Per capita, Italy has more hospital beds—so-called “surge capacity”—more doctors and more ventilators. Italians have a longer life expectancy than Americans, not to mention British, French, Germans, Swedes and Finns. The virus has had an especially fatal impact on northern Italy, the country’s richest region.

 

There are a number of reasons why Italy has been so hard-hit, but a major one can be placed at the feet of former Interior Minister Matteo Salvini of the xenophobic, rightwing League Party and his allies on the Italian right, including former prime minister Silvio Berlusconi.

 

Italy has the oldest population in Europe, and one of the oldest in the world. It did not get that way be accident. Right-wing parties have long targeted immigrants, even though the immigrant population—a little over 600,000—is not large by international standards. Immigrants as a “threat to European values” has been the rallying cry for the right in France, Germany, Hungry, Poland, Greece, Spain, the Netherlands and Britain as well.

 

In the last Italian election, the League and its then ally, The Five Star Movement, built their campaigns around resisting immigration. Anti-immigrant parties also did well in Spain and certainly played a major role in pulling the United Kingdom out of the EU.

 

Resistance to immigration plays a major role in “graying” the population. Italy has one of the lowest birthrates in the world, topped only by Japan. The demographic effects of this are “an apocalypse” according to former Italian Health Minister Beatrice Lorenzin. “In five years, we have lost more than 66,000 births [per year]” equal to the population of the city of Siena. “If we link this to this increasingly old and chronically ill people, we have a picture of a moribund country.”

 

According to the World Health Organization, the ideal birth-death replacement ratio in advanced countries is 2.1. Italy’s is 1.32., which means not only an older population, but also fewer working age people to pay the taxes that fund the social infrastructure, including health care.

 

As long as there is no a major health crisis, countries muddle though, but when something like the Corona virus arrives, it exposes the underlying weaknesses of the system.

 

Some 60 percent of Italians are over 40, and 23 percent are over 65. It is demographics like these that make Covid-19 so lethal. From age 10 to 39, the virus has a death rate of 0.2 percent, more deadly than influenza, but not overly so. But starting at age 40, the death rate starts to rise, reaching 8 percent for adults age 70 to 79, and then jumping to 14.8 percent over 80. The average age of Corona virus deaths in Italy is 81.

 

When the economic meltdown hit Europe in 2008, the European Union responded by instituting painful austerity measures that targeted things like health care. Over the past 10 years Italy has cut some 37 billion euros from its health system. The infrastructure that could have dealt with a health crisis like Covid-19 was hollowed out, so that when the disease hit, there simply weren’t enough troops or resources to resist it.

 

Add to that the age of Italians, and the outcome was almost foreordained.

 

The US is in a very similar position, but for somewhat different reasons. As Pulitzer Prize-winning medical writer Laurie Garrett points out, it was managed care that has derailed the ability of the American health system to respond to a crisis. “What happened with managed care is that hospitals eliminated surplus beds and surplus personnel. So, far from being ready to deal with surge capacity, we’re actually understaffed and we have massive nurse shortages across the nation. “

 

Much of that shortage can also be attributed to managed care. Nurses are overloaded with too many patients, work 10 and 12 hour shifts on a regular basis, and, while initially well paid, their compensation tends to flatten out over the long run. Burn out is a major professional risk for nursing.

 

Yet in a pandemic, nursing is the most important element in health care according to John Barry, author of the “The Great Influenza” about the 1918-19 virus that killed up to 100 million people, including 675,000 Americans. A post mortem of the pandemic found “What could help, more than doctors, were nurses. Nursing could ease the strain of a patient, keep a patient hydrated, calm, provide the best nutrition, and cool the intense fevers.” Nurses, the study showed, gave victims “the best possible chance to survive.”

 

The issues in Italy’s 2018 election were pretty straightforward: slow growth, high youth unemployment, a starving education system and a deteriorating infrastructure—Rome was literally drowning in garbage. But instead of the failed austerity strategy of the EU, the main election theme became immigration, a subject that had nothing to do with Italy’s economic crisis, troubled banking sector or burdensome national debt.

 

Berlusconi, leader of the rightwing Forza Italia Party, said “All these immigrants live off of trickery and crime.” Forza made common cause with the fascist Brothers of Italy, whose leader, Giogia Meloni, called for halting immigrants with a “naval blockade.”

 

The main voice of the xenophobic campaign, however, was Salvini and the League. Immigrants, he said, bring “chaos, anger, drug dealing, thefts, rape and violence,” and pose a threat to the “white race.”

 

The Five Star Movement leader Luigi Di Mario joined the immigrant bashing, if not with quite the vitriol of Berlusconi, Salvini and Meloni. The center-left Democratic Party ducked the issue, leaving the field to the right.

 

The outcome was predictable: the Democratic Party was routed and the Five Star Movement and League swept into power. Salvini took the post of Interior Minister and actually instituted a naval blockade, a violation of International Law and the 1982 Law of the Sea.

 

Eventually the League and Five Star had a falling out, and Salvini was ousted from his post, but the damage was done. The desperately needed repairs to infrastructure and investments in health care were shelved. When Covid-19 stuck, Italy was unprepared.

 

Much the same can be said for the rest of Europe, where more than a decade of austerity policies have weakened health care systems all over the continent.

 

Nor is Italy is facing a demographic catastrophe alone. The EU-wide replacement ratio is a tepid 1.58, with only France and Ireland approaching—but not reaching—2.1.

 

If Germany does not increase the number of migrants it takes, the population will decline from 81 million to 67 million by 2060, reducing the workforce to 54 percent of the population, not enough to keep up with current levels of social spending. The Berlin Institute for Population and Development estimates that Germany will need 500,000 immigrants a year for the next 35 years to keep pensions and social services at current levels.

 

Spain—which saw the rightwing anti-immigration party do well in the last election—is bleeding population, particularly in small towns, some 1500 of which have been abandoned. Spain has weathered a decade and a half of austerity, which damaged the country’s health care infrastructure. After Italy, Spain is the European country hardest hit by Covid-19.

 

As populations age, immigrants become a necessity. Not only is new blood needed to fill in the work needs of economies, broadening the tax base that pays for infrastructure, but, too, old people need caretaking, as the Japanese have found out. After centuries of xenophobic policies that made immigration to Japan almost impossible, the Japanese have been forced to accept large numbers of migrants to staff senior facilities.

 

The United States will face a similar crisis if the Trump administration is successful in chocking off immigration. While the US replacement ratio is higher than the EU’s, it still falls under 2.1, and that will have serious demographic consequences in the long run.

 

It may be that for-profit health care simply can’t cope with a pandemic because it finds maintaining adequate surge capacity in hospital beds, ventilators and staff reduces stockholders’ dividends. And public health care systems in Europe—which have better outcomes than the American system’s—only work if they are well funded.

 

To the biblical four horsemen—war, famine, wild beasts and plague—we can add two more: profits and austerity.

 

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Europe’s New Barbarians

Europe’s New Barbarians

Dispatches From The Edge

Aug. 28, 2015

 

On one level, the recent financial agreement between the European Union (EU) and Greece makes no sense: not a single major economist thinks the $96 billion loan will allow Athens to repay its debts, or to get the economy moving anywhere but downwards. It is what former Greek Economic Minister Yanis Varoufakis called a “suicide” pact, with a strong emphasis on humiliating the leftwing Syriza government.

 

Why construct a pact that everyone knows will fail?

 

On the Left, the interpretation is that the agreement is a conscious act of vengeance by the “Troika”—the European Central Bank, the European Commission and the International Monetary Fund—to punish Greece for daring to challenge the austerity program that has devastated the economy and impoverished its people. The evidence for this explanation is certainly persuasive. The more the Greeks tried to negotiate a compromise with the EU, the worse the deal got. The final agreement was the most punitive of all. The message was clear: rattle the gates of Heaven at your own peril.

 

It was certainly a grim warning to other countries with strong anti-austerity movements, in particular Portugal, Spain and Ireland.

 

But austerity as an economic strategy is about more than just throwing a scare into countries that, exhausted by years of cutbacks and high unemployment, are thinking of changing course. It is also about laying the groundwork for the triumph of multinational corporate capitalism and undermining the social contract between labor and capital that has characterized much of Europe for the past two generations.

 

It is a new kind of barbarism, one that sacks countries with fine print.

 

Take Greece’s pharmacy law that the Troika has targeted for elimination in the name of “reform.” Current rules require that drug stores be owned by a pharmacist, who can’t own more than one establishment, that over the counter drugs can only be sold in drug stores, and that the price of medicines be capped. Similar laws exist in Spain, Germany, Portugal, France, Cyprus, Austria and Bulgaria, and were successfully defended before the European Court of Justice in 2009.

 

For obvious reasons multinational pharmacy corporations like CVS, Walgreen, and Rite Aid, plus retail goliaths like Wal-Mart, don’t like these laws, because they restrict the ability of these giant firms to dominate the market.

 

But the pharmacy law is hardly Greeks being “quaint” and old-fashioned. The U.S. state of North Dakota has a similar law, one that Wal-Mart and Walgreens have been trying to overturn since 2011. Twice thwarted by the state’s legislature, the two retail giants recruited an out-of-state signature gathering firm and poured $3 million into an initiative to repeal it. North Dakotans voted to keep their pharmacy law 59 percent to 41 percent.

 

The reason is straightforward: “North Dakotans have pharmacy care that outperforms care in other states on every key measure, from cost to access,” says author David Morris. Drug prices are cheaper in North Dakota than in most other states, rural areas are better served, and there is more competition.

 

The Troika is also demanding that Greece ditch its fresh milk law, which favors local dairy producers over industrial-size firms in the Netherlands and Scandinavia. The EU claims that, while quality may be affected, prices will go down. But, as Nobel Laureate economist Joseph Stiglitz found, “savings” in efficiency are not always passed on to consumers.

 

In general, smaller firms hire more workers and provide more full time jobs than big corporations. Large operations like Wal-Mart are more efficient, but the company’s workforce is mostly part time and paid wages so low that workers are forced to use government support services. In essence, taxpayers subsidize corporations like Wal-Mart.

 

A key demand of the Troika is “reform” of the labor market to make it easier for employers to dismiss workers, establish “two-tier” wage scales—new hires are paid less than long time employees—and to end industry-wide collective bargaining. The latter means that unions—already weakened by layoffs—will have to bargain unit by unit, an expensive, exhausting and time consuming undertaking.

 

The results of such “reforms” are changing the labor market in places like Spain, France, and Italy.

 

After years of rising poverty rates, the Spanish economy has finally begun to grow, but the growth is largely a consequence of falling energy prices, and the jobs being created are mostly part-time or temporary, and at considerably lower wages than pre-2007. As Daniel Alastuey, the secretary-general of Aragon’s UGT, one of Spain’s largest unions told the New York Times, “A new figure has emerged in Spain: the employed person who is below the poverty threshold.”

 

According to the Financial Times, France has seen a similar development. In 2000, some 25 percent of all labor contracts were for permanent jobs. That has fallen to less than 16 percent, and out of 20 million yearly labor contracts, two-thirds are for less than a month. Employers are dismissing workers, than re-hiring them under a temporary contract.

 

In 1995, temporary workers made up 7.2 percent of the jobs in Italy. Today, according to the Financial Times, that figure is 13.2 percent, and 52.5 percent for Italians aged 15 to 24. It is extremely difficult to organize temporary workers, and their growing presence in the workforce has eroded the power of trade unions to fight for better wages, working conditions and benefits.

 

In spite of promises that tight money and austerity would re-start economies devastated by the 2007-2008 financial crisis, growth is pretty much dead in the water continent-wide. And economies that have shown growth have yet to approach their pre-meltdown levels. Even the more prosperous northern parts of the continent are sluggish. Finland and the Netherlands are in a recession.

 

There is also considerable regional unevenness in economic development. Italy’s output contracted 0.4% in 2014, but the country’s south fell by 1.3%. Income for southern residents is also plummeting. Some 60% of southern Italians live on less than $13,400 a year, as compared to 28.5% of the north. “We’re in an era in which the winners become ever stronger and weakest move even further behind,” Italian economist Matteo Caroli told the Financial Times.

 

That economic division of the house is also characteristic of Spain, While the national jobless rate is an horrendous 23.7 percent, the country’s most populous province in the south, Andalusia, sports an unemployment rate of 41 percent. Only Spanish youth are worse off. Their jobless rate is over 50 percent.

 

Italy and Spain are microcosms for the rest of Europe. The EU’s south—Italy, Portugal, Spain, Greece, Cyprus, and Bulgaria—are characterized by high unemployment, deeply stressed economies, and falling standards of living. While the big economies of the north, France, Great Britain, the Netherlands, and Germany, are hardly booming—the EU growth rate over all is a modest 1.6 percent—they are in better shape than their southern neighbors.

 

Geographically, Ireland is in the north, but with high unemployment and widespread poverty brought on by the austerity policies of the EU, it is in the same boat as the south. Indeed, Greek Finance Minister Euclid Tsakalotos told the annual conference of the leftwing, anti-austerity party Sinn Fein that Greece considered the Irish “honorary southerners.”

 

Austerity has become a Trojan horse for multinational corporations, and a strategy for weakening trade unions and eroding democracy. But it is not popular, and governments that have adopted it have many times found themselves driven out of power or nervously watching their polls numbers fall. Spain’s rightwing Populist Party is on the ropes, Sinn Fein is the second largest party in Ireland, Portugal’s rightwing government is running scared, and polls indicate that the French electorate supports the Greeks in their resistance to austerity.

 

The Troika is an unelected body, and yet it has the power to command economies. National parliaments are being reduced to rubber stamps, endorsing economic and social programs over which they have little control. If the Troika successfully removes peoples’ right to choose their own economic policies, then it will have cemented the last bricks into the fortress that multinational capital is constructing on the continent.

 

In 415 BC, the Athenians told the residents of Milos that they had no choice but to ally themselves with Athens in the Peloponnesian War. “The powerful do whatever their power allows and the weak simply give in and accept it,” Thucydides says the Athenians told the island’s residents. Milos refused and was utterly destroyed. The ancient Greeks could out-barbarian the barbarians any day.

 

But it is not the 5th century BC, and while the Troika has enormous power, it is finding it increasingly difficult to rule over 500 million people, a growing number of whom want a say in their lives. Between now and next April, four countries, all suffering under the painful stewardship of the Troika, will hold national elections: Portugal, Greece, Spain and Ireland. The outcomes of those campaigns will go a long way toward determining whether democracy or autocracy is the future of the continent.

 

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