3 December 2019   Leave a comment

In world politics we often talk about rich and poor countries and use economic data to sort out the two. I am not sure why we fell into that trap, but economic data actually tells us very little about the quality of life in different countries. One of the features of living in a “rich” country is longer life. A long life expectancy has been one of the lodestars of the idea of progress. And it is true that as a general rule, greater wealth allows better living conditions, greater access to improvements in medical care, and more control over threats from the environment.

But the US has now joined some other countries, such as Russia, that are experiencing a decline in life expectancy. National Public Radio conducted an interview with Dr. Steven Woolf who was the lead author of the study conducted by the American Medical Association. Excerpts from the interview are disturbing.

WOOLF: Well, what we found is that since 2010, all-cause mortality – that means the chances of dying before age 65 – have been increasing in the United States. And for the past three years, life expectancy has been decreasing. It’s a quite alarming recent trend. But our study shows that it’s been decades in the making, starting back in the 1980s.

GREENE: Is this happening in other wealthy countries, or is this a distinctly U.S. thing?

WOOLF: That’s the thing. This does appear to be a distinctly American phenomenon. There is some element of this happening a little bit in the U.K. and Canada but nothing on the scale of the United States. Life expectancy continues to climb in other wealthy nations.

GREENE: So what are the factors here? What do you think is happening?

WOOLF: Well, we did a pretty detailed analysis to peel back the onion and try to understand this. The trend in life expectancy is being caused, as you said, by increased mortality in working-age Americans from age 25 to 64. And the leading contributors to that is the drug addiction problem. Drug overdoses are a major factor in explaining this trend. However, we also found increases in deaths from alcoholism, from suicides and from dozens of organ diseases – all told, 35 causes of death where mortality rates had increased in this age group.

The demographic breakdown of the decline suggests that poor states in the US have suffered the greatest declines:

“In regard to regional impact, the largest relative increases in midlife mortality rates were observed in New England (New Hampshire, 23.3%; Maine, 20.7%; Vermont, 19.9%) and the Ohio Valley (West Virginia, 23.0%; Ohio, 21.6%; Indiana, 14.8%; Kentucky, 14.7%). Additionally, analyses revealed the increase in midlife mortality from 2010 through 2017 was associated with an estimated 33,307 excess deaths and 32.8% of these were attributable to the Ohio Valley.

“When examining cause, analyses revealed the midlife mortality from drug overdoses increased by 386.5% from 1999 to 2017 from 6.7 deaths per 100,000 to 32.5 deaths per 100,000. While age-specific increases were significant among those aged between 25 and 34 years (531.4% increase) the largest relative increase occurred in those aged 55 to 64 years (909.2%).

We need to rethink what we mean by “rich”. The data indicates that US society is in real trouble and indices such as the GDP should not leave us sanguine about the quality of life.

The International Monetary Fund published a report last September on the global problem of firms and individuals hiding money in shell companies in order to avoid paying taxes on the money. The IMF defines the practice of disguising Foreign Direct Investments (FDI) in this way:

“However, not all FDI brings capital in service of productivity gains. In practice, FDI is defined as cross-border financial investments between firms belonging to the same multinational group, and much of it is phantom in nature—investments that pass through empty corporate shells. These shells, also called special purpose entities, have no real business activities. Rather, they carry out holding activities, conduct intrafirm financing, or manage intangible assets—often to minimize multinationals’ global tax bill. Such financial and tax engineering blurs traditional FDI statistics and makes it difficult to understand genuine economic integration.”

The study indicates that about $15 trillion is hidden in these shell companies, effectively reducing the tax revenues for every state in the world. That $15 trillion represents about 40% of all the money identified as Foreign Direct Investment. Economic orthodoxy would have us believe that investments stimulate job creation. The money hidden in shell companies does not stimulate any additional economic activity–it just sits in bank accounts in any number of tax havens such as Luxembourg or the Cayman Islands. To get an idea of how distorting this practice is the IMF uses Luxembourg as an example: ” According to official statistics, Luxembourg, a country of 600,000 people, hosts as much foreign direct investment (FDI) as the United States and much more than China. Luxembourg’s $4 trillion in FDI comes out to $6.6 million a person. FDI of this size hardly reflects brick-and-mortar investments in the minuscule Luxembourg economy.” One would think that governments would seize the opportunity to tax all these revenues. That they do not is testimony to the power of great wealth in political decisions.

Posted December 3, 2019 by vferraro1971 in World Politics

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