What does the junior doctors’ strike have to do with economics?

This piece appeared on openDemocracy and the New Economics Foundation blog

Why cover the junior doctors’ strike on an economics podcast?

After all, we’ve managed to run for a year, 44 episodes, and a six-part miniseries tracing the history of neoliberalism without more than an occasional mention of healthcare. Each week we cover a big economic story and try to give a balanced but alternative take on the issue. The NHS just hasn’t come up all that much.

But as Dr Ben Bouquet, public health registrar and junior doctor, explains this week, few areas of public policy are as intertwined with economic ideology as health.

Despite Treasury and DH announcements, reannouncements and re-reannouncements of billions more in funding (all of which invariably turn out to be different ways of counting the same money), the NHS is mid-way through a decade of relative austerity. At the same time, it has been a playground for successive governments to try out the marketisation of public services under the guise of increasing efficiency.

The result: high transaction costs, costly private debts, and diktats from central NHS bodies urging commissioners to financially penalise struggling trusts lest the Treasury’s £10bn surplus target for 2020 fall by the wayside. As for the strike, the dispute over junior doctors’ contracts can be tricky to follow, not least because what’s on offer keeps changing, but at the heart of doctors’ concerns about safety is the fear that the NHS is becoming increasingly thinly spread. Is all of this a false economy?

There are two big points to challenge that we often cover on the podcast in the abstract, but which manifest themselves in healthcare particularly clearly. And if we can win them anywhere, we should be winning them in the NHS.

First, that the ‘rules of the game’ that have formed the mainstream of economic thinking since the 1980s can be applied to anything. Collected together, these are often labelled as ‘neoliberalism’. (If capitalism is the game, neoliberalism is one of several sets of rules you could choose to play by.) As economist James Meadway told us back in June, the core tenets are broadly that individual choice is king, free enterprise knows best, and governments should play a limited role in the economy except in creating and promoting markets. But when choice is limited by urgency or complexity, free enterprise can’t offer more caring or efficient services than the public sector, and marketisation leads to high transaction costs and perverse incentives, we’re left with plenty of evidence to the contrary.

Second, and perhaps more difficult, is the assumption that healthcare is a burden rather than an investment.

On an episode about feminist economics with Polly Trenow from the Women’s Budget Group, we talked about the idea of social infrastructure. The economics of physical infrastructure is easy to understand – build a bridge, and the people from the other side of the river can come and buy things in your shops and work in your offices. If you’re a politician, you also get to wear hi-viz and a hardhat. But social infrastructure is just as vital to our economy. Just one example: grandparents who now live healthily into old age, thanks in no small part to the NHS, provide childcare worth around £4bn a year, though you won’t see that care reflected in GDP figures.

George Osborne likes to say that you can’t have a strong NHS without a strong economy. But I’d argue it works the other way round: you can’t have a strong economy without strong social infrastructure, and that includes having an effective health service.

In developing countries, investing in reducing infant mortality means families typically have fewer children. Having fewer children means they can spend more per child. Spending more per child means each child gets more food, more education and more opportunity, meaning that child can be more productive and help pull the country out of poverty. Strong healthcare is a catalyst for growth, not an afterthought once your country is already rich.

These assumptions – that social infrastructure is a burden on public finances, not an investment in creating a productive society, and that neoliberalism should be applied everywhere – are at the root of current problems in the NHS. And we can only unpick them if we understand them. Hopefully the Weekly Economics Podcast is doing its bit, 15 minutes at a time.