Market Sentiment & Lateral Thoughts

from Neil Behrmann and other authors

It’s time economists focused on the social gradient

IT is depressing that almost all economists ignore health and well-being when they analyse economies, writes Neil Behrmann.
Instead of just growth, inflation, and monetary and fiscal policy, they should monitor the social gradient. This is basically the difference in social well-being; income and health between the poor, middle-income and rich. If that social gradient is flattened, the overall improvement in health, well-being, empowerment and motivation from the bottom to the top would raise productivity and consumption, leading to business and economic growth.
Sir Michael Marmot, professor of epidemiology and public health at University College London and president of the World Medical Association, spells out the vital importance of narrowing health and social inequalities. Of course there are exceptions, but his latest book

The Health Gap shows in no uncertain terms that the wealthiest people live several years longer than white and blue-collar workers.

The middle rungs in turn lead healthier and more fulfilling lives than poverty-stricken people at the bottom of the social pile. The consequences of income inequality seem obvious but instead of seeking ways to improve well-being, government economists and central bankers spend their time tinkering with interest rates and taxation. Bank and private-sector colleagues analyse the tinkering and make forecasts that are invariably off beam.
Conventional approaches to improving health have emphasised improved medical care, sanitation and control of disease. The health authorities also warn against behavioural risks, notably smoking, drinking and obesity, leading to heart disease, cancer and diabetes.
Prof Marmot, who has studied global and national health inequities over almost five decades, however, maintains that although these approaches have raised global life spans, “they only go so far”. People living with relatively poor social, education and working conditions suffer the worst health, whether they are in developing or developed nations. Generally, the higher the social status of individuals is, the better is their health. Several social studies over the years show that those who are in greater control of their lives live longer.
Governments and businesses should create the conditions to empower individuals and communities so that people can lead flourishing lives, contends Prof Marmot. These moves will reduce health inequalities and markedly improve the well-being of nations and their populace. The lifespan of Singaporeans, for example, has jumped from 68 years in 1970 to 83 years in 2013, according to the World Health Organization. This is impressive considering that the island is two to three years ahead of the United States, UK, Germany and France.
It is some 15 years higher than Russia where the average lifespan has remained around 68 years since 1970. But averages are averages and don’t consider the social gradient within society. According to some estimates, about 378,000 Singapore residents are poverty-stricken and the Lien Centre of Social Innovation has highlighted the relatively poor physical, mental and emotional health of almost a million low-waged, low-skilled migrant workers.
Inequalities between men and women should also be narrowed. On average, women in Singapore live 4.4 years longer than men, so their salaries and pensions should match their male counterparts’, not only for fairness, but to provide for families and a healthy and happy old age.

It makes good economic and business sense for governments and corporations to raise budgets to flatten the social gradient.

Progressive taxation is the most obvious solution, according to Prof Marmot. The super rich, however, manage to keep their taxation at a minimum and so do international companies such as Amazon. The key is to marshal this wealth to close inequities, flatten the social gradient and boost economies.
The financial asset boom since 2009 has outpaced global economic growth by a wide margin. It has favoured the wealthy as their property, shares and pensions far exceed the ordinary wage and salary earner. The national and global authorities should tighten the tax net and also provide incentives for powerful corporations and individuals to boost foundations and reduce inequities.
Health would also improve if lower to middle-income employees had greater control over their lives. It is up to management to be imaginative with factory and office environments and improve communication. They should not only raise income incentives, but upgrade medical, exercise and sport facilities. The impact on lower stress and self-esteem would raise productivity, profitability and growth.

Copyright Neil Behrmann, first published in The Business Times, Singapore>
Neil Behrmann is author of Trader Jack- The Story of Jack Miner and anti-war children’s novel Butterfly Battle- The Story of the Great Insect War

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