Privatization Kills

Mass Communist Bloc Privatization Led To Surge In Male Deaths: Former Eastern Bloc countries that swiftly and massively privatized their state assets in the early 1990s, leading to a surge in unemployment, recorded a consequent wave of male deaths according to a recent study published by The Lancet.

The consequences hold stark lessons for China, India and other countries mulling reforms of their state sector. Between 1991 and 1994, male deaths in Russia, Kazakhstan, Latvia, Lithuania and Estonia, where intense, fast-track privatization took place, rose 42%, coinciding with a 305% increase in unemployment, its authors say.
At the other end of the scale, Albania, Croatia, the Czech Republic, Poland and Slovenia – where either privatization was more cautious or the social safety net was stronger – saw a fall of 10% in male mortality and only a 2% rise in unemployment. The probe focussed on the death rate between 1989 and 2002 among men of working age in post-Communist economies in eastern Europe and the former Soviet Union.
To avoid distortion, the investigators filtered out trade and price liberalization, income change and historical levels of health. They found that swift, massive privatization of assets was generally correlated with a lightning rise in unemployment and a sharp increase in mortality among men aged 15-59. High alcohol consumption among jobless men could explain much of the increase in deaths, they believe.
In addition, in the old Communist system, many employers provided extensive health and social care for their workers, and these services were lost upon unemployment or were cut back or scrapped upon privatization. Economies that took a more gradual approach to selling state assets suffered far fewer casualties among their adult male population.
But there were also important exceptions. Some countries where massive privatization took place were able to withstand the shock well, thanks to support networks provided by churches, unions and other groups. In countries where 45% or more of the population were members of at least one such social organization, mass privatization didn’t increase mortality, the researchers found.
“Great caution should be taken when macroeconomic policies seek radically to overhaul the economy without considering potential effects on the population’s health,” says the study. “As variants of rapid reform policies are being debated in China, India, Egypt, and several other developing and middle-income countries – including Iraq – which are just beginning to privatize their large state-owned sectors, the lessons from the transitions from Communism should be kept in mind.” The study defined rapid, massive privatization as the disposal of at least 25% of large state-owned enterprises to the private sector within a two-year period.

The authors are David Stuckler of Oxford University and Lawrence King at the University of Cambridge, both sociologists; and Martin McKee of the London School of Hygiene and Tropical Medicine, an expert on health in the former Eastern Bloc. Full text available for payment at The Lancet

Leave a Reply