Financial Suicide: Lessons from Economic Demography

By Joshua Mellors

If large portions of your population suddenly emigrate, or suicide rates markedly increase, it may be time for a policy rethink.

Image courtesy of Occupy Las Vegas

The West’s global financial crisis and the disastrous economic policies which have accompanied it have had a profound impact on Western populations. Indeed, financial crime and economic policy have been shown to be matters of life and death, literally.

A recent study published in the British Medical Journal claims that the recession in Britain and rising unemployment may have led more than 1,000 people in England to commit suicide. Suicide rates are reportedly on the rise across Europe, especially in the periphery (PIIGS: Portugal, Italy, Ireland, Greece, Spain), reversing a decade of steady decline. Greece has been particularly badly hit and has just moved from having the lowest suicide rate in Europe to the highest, the rate having doubled in 2011 alone.

Emigration has also increased dramatically. While comprehensive data for total emigration per se are not available for all the peripheral countries, the chart below illustrates the recent rise in emigration to Germany. As the chart shows, this trend has been especially dramatic in Greece, not least since youth unemployment has already surpassed 50% (and counting). The Greek population has begun to decline for the first time in at least fifty years. Total emigration from Ireland has reached its highest point since the Famine: a rate of 3,000 per month. Many Spanish and Portuguese are also reportedly fleeing what are increasingly viewed as their own ‘sinking ships’ for the growing prosperity of their former colonies.

This is not even to mention the far more severe effects of the crisis on the “developing world” itself, which the World Bank estimates include 1.4 to 2.8 million additional infant deaths between 2009 and 2015.

This picture highlights the importance of economic demography, a subject totally neglected in the abstract, utopian modelling which dominates mainstream economics. Eugenics and Malthusian bigotry aside, economic demography can offer a vivid illustration of the devastating effects of economic and financial turmoil. Its insights could be incorporated into a reformed, post-crisis economics, which should do its best to describe the real world. A general policy guide, utilising an economic demography approach, might be: if large portions of your population suddenly emigrate, or suicide rates markedly increase, it might be time for a Plan B.

Unfortunately, these analytical tools remain yet to enter the proverbial tool box.

In Britain, Chancellor George Osborne has stiffened his austerian resolve and, armed with his trusty printing press, is hell-bent in pursuit of a Japanese-style lost decade. The radical, redistributive policy of austerity combined with quantitative easing transfers wealth from the already de-industrialised real economy into the black hole of insolvent bank balance sheets, drastically increasing both overall debt levels and the eventual severity of the inevitable crash.

The eurozone has placed itself in the paradoxical predicament of being locked into a common currency arrangement which structurally produces budget deficits in the periphery and a Maastricht Treaty which limits them. By enforcing further wealth transfers from the periphery into the black hole of (mainly French and German) insolvent bank balance sheets in the center (euphemised as “bailouts”) instead of a structural solution to the crisis, the ruling Eurocrats appear determined to destroy the common currency at the cost of at least the entire Greek population.

As hinted, from the perspective of Europe as a whole this path is in fact suicidal. The austerity-induced weakening of demand in the periphery will increasingly reduce its capacity to absorb the center’s exports – indeed, German manufacturing is already in decline as a result – and this capacity cannot be propped up forever on the basis of exponentially increasing debt. In the end, as economist Michael Hudson always points out so simply, “debts that can’t be paid, won’t be.”

So there would be a lot to gain from an economic demography approach which takes heed of the effects of economics and finance on human populations, particularly as it should lead to policies which anyway make good economic sense (if consideration of such human effects can possibly be divorced from “economic sense”.) In this case, at the very least, debts would be written down to the ability to pay – a real “royal jubilee” – and populations would be freed from the prospect of a lifetime of debt serfdom. Such was routine practice in the Ancient Near East whenever a new ruler came to the throne, due to a widespread recognition of the crippling effects of unpayable debts – which robbed entire populations not only of their property but of their freedom.

In the meantime, however, Europe looks set to substitute its current status as the world’s largest economy for an express ticket back to the Dark Ages. It will be interesting to see how many stick around to go down with the ship, as well as whether or not the refugees will be welcomed with open arms by the former colonies.

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21 comments
  1. Gary Van Velsor said:

    Just saw Joshua on the Kaiser Report. Interesting and made me come to your site. It’s good to hear some sense being made out of this tragedy in Europe. I like the Bailouts + transfer of wealth analysis.
    Joshua, you shouldn’t have let Max talk so much. I wanted to here more of what you had to say. But then, it is his show, no?
    Gary Van Velsor

  2. Kleptocratistan said:

    Good interview on Keiser report – well written article too, but to say “Eugenics and Malthusian bigotry aside” I think misses the point. Population reduction is a well stated aim of the powers that be – often couched in environmental terms or democratization of family planning to the developing World (who can argue against that?). It’s not enough that wealth is transferred from the masses to the elites – there should be no serfs left at the end capable of starting a revolution. With this in mind – trying to appeal to any sense of empathy with the “human effects” seems futile. Have fun..

    • trampshining said:

      I agree. Population reduction is a main target of the elite. In 2006 I found on *Prison Planet” (Alex Jones) an article about
      Dr. Eric Planta at the Texas Academy for Science who advocated, with roared approval from his elite audience, to disseminate the Ebola Virus to reduce the world population. He insisted that the Ebola virus would be more effective than the Aids virus. The earth is overpopulated and a reduction would be helpful but why not give the pill or other birth control?
      The sadistic idea has the smell of the nazis but then that is the US today. Perverted at the top and uninformed and uneducated the bottom and Europe is doing its best to follow as we can see.

  3. Joshua Mellors said:

    Thanks Gary. Well he’s much more experienced than me I suppose!

    @Kleptocratistan – that was just a disclaimer so that you didn’t think that I was advocating such an approach (eugenics and Malthusian bigotry). I’m well aware that the powers that be specifically do advocate and have for a long time advocated population reduction – especially of non-white populations. A really good piece on this is Chapter 1, ‘The Numbers Game’, of Frank Furedi’s Population and Development A Critical Introduction. He points out that after ‘terrorism’ the greatest threat as perceived by American elites is ‘population growth’. Keynes was himself a director of the British Eugenics Society and his mentor, the great economist Alfred Marshall, said the following:

    “if the lower classes of Englishmen multiply more rapidly than those which are morally and physically superior, not only will the population of England deteriorate, but also that part of the population of America and Australia which descends from Englishmen will be less intelligent than it would otherwise be. Again if Englishmen multiply less rapidly than the Chinese, this spiritless race will overrun portions of the earth that otherwise would have been populated by English vigour.”

    Not hard to trace where the bigotry over Chinese ‘environmental degradation’ comes from – “but there are so many of them!”

    See also Bill Black’s recent article tracing current economic policy and ideas of austerity to those of the English elite as they purged the Irish population (who were viewed at the time as essentially non-white and ‘simian-like’ in the popular press): http://neweconomicperspectives.org/2012/08/why-is-paul-ryan-an-irish-catholic-praising-the-dogmas-that-drove-the-great-hunger.html

    “[existing policies] will not kill more than one million Irish in 1848 and that will scarcely be enough to do much good.” – Queen Victoria’s economist, Nassau Senior

    I suppose I was being non-accusatory in the article to focus on the contradiction in current policies (financial suicide) from a general economic point of view. Of course there are many who simply don’t care how many people die as a result of these policies or even view it as desirable. As the above quotes suggest, they tend to favour the euthanasia of the poor and non-white classes (as opposed to the ‘euthanasia of the rentier’). But at the end of the day this attitude is self-destructive because you can’t have an economy without people! What good is grabbing assets if there’s no demand for them? :)

    • Richard said:

      Joshua – Your Keiser report piece. I agree with most of what you say but if I can highlight a couple of the things you said. http://www.youtube.com/watch?v=4eQnFaj6H0o&feature=plcp 19.05. Governments have to turn over cash to banks. This is not correct, government always have the option of defaulting.

      Your understanding of the German dynamic in the Euro crisis is deeply flawed (as is most people’s). You claim Germany is pushing debt on Greece. This is the opposite of reality, Germany is trying to get Greece to reduce their debt, Germany is already taking hits on bad loans to Greece, they do not want to increase the debt load.

      What you have happening in Greece is the Greek political class sabotaging the Greek economy in order to get the ECB to print.

      Greece is the tortured puppy in the whole scenario if you wish. The banks are telling Germany if you don’t let us print we will torture the dog and if you don’t let us print the puppy’s pain will be on your head. There is no government austerity in Greece, only tax increases on the private citizen.

      The things you highlight about crippling German exports, Germany agrees with you which is why they are trying to make Greece sustainable but if Greece becomes sustainable then there is no reason to give the ECB unlimited powers to buy bonds, you see where this is going?

      With regards to Max’s comment about Germany trying to get periphery countries to give up their sovereignty. This goes against the historic record of Germany and also against the actions of the German government as of today. Germany does not want a centralised government in Europe and never wanted the Euro to start with. http://www.youtube.com/watch?v=mn0hsY7R0ck&feature=plcp

      About Greece needing to devalue to compete with Germany, I’m sorry, that is utter garbage. It is obvious to any Greek why Greece cannot compete with Germany and it is down to the massive government regulation and taxation of the economy. If the Greek economy were as free as the UK’s it would have zero problems. For example, businesses in Greece are taxed on sales not profit.

      You talk about a federal system and redistribution of “wealth”. Again, completely against German history with regards to a centrally controlled Europe excluding a few years of war. The Greek money to buy Mercedes came from the Greek government borrowing money. These loans are now going bad. Germany is not a long term winner by supplying Mercedes to countries that will default.

      In short, Germany is not anywhere near as big a winner from its exports to Greece as you make out and the surplus you talk about is actually loans in default.

      The big question here is why Germany did not let Greek default at the start, Germany is propping up an oppressive regime in Greece through these bailouts. The best thing for the average Greek would be for the bailouts to stop.

      The best answer I have is that the German government is also getting blackmailed by banks (& central banks), like every other country.

      Good interview, I enjoyed it

      • Joshua Mellors said:

        Richard you seem to have adopted a partisan, pro-German view of things which is pretty much back to front in my opinion. Germany and the Eurocrats are increasing the Greek debt. Whenever you hear the term ‘bailout’ what is actually happening is an increase of the Greek debt. It’s similar to the standard IMF policy of encouraging governments to pay off debt with more debt. You avoid default on an imminent debt payment by taking out another loan, which makes the overall debt greater. Saying that Germany is ‘taking hits on bad loans to Greece’ is misleading because it is Germany’s own banks who have made the bad loans to Greece and that it is bailing out. In a capitalist system they would lose and the governments would default, but this is not that…

        Governments technically have the ‘option’ of defaulting, but are not actually being allowed to! That is the problem! Instead of Greece defaulting, for example, a banker-dictator, Lucas Papademos, was rushed in to ensure continued compliance with the European debt increase/income reduction policy (austerity). Hence Max’s comments about loss of sovereignty. As we have seen, this policy advocated by Germany has massively increased Greek debt, so either the Germans are following neoclassical nonsense economic theory or they know exactly what they are doing, as I suggested in the interview. Germany is not ‘trying to make Greece sustainable’.

        I agree that austerity is what you cite – tax increases on the private citizen – but in addition to government spending cuts which reduce demand in the private economy. This has led to the massive reduction of Greek GDP (I believe about 20% since the start of the crisis) and 25% unemployment.

        The Greek political elite is ripping off the Greek people in collaboration with the European elite, rather than in opposition to them.

        The fundamental dynamic in the Euro is precisely that which I explained in the interview. Because Germany has supressed its wages below productivity increases through agreements between government and unions its exports are artifically cheap. This would be rectified in absence of the common currency through devaluation of the currencies of the peripheral countries, such as Greece, but as they are locked into the Euro this cannot happen. Therefore the peripheral countries, who hadn’t reduced wages in this way, cannot devalue in order to reduce imports from Germany and bring their current accounts into balance. The resulting persistent current account deficits in the periphery lead to government deficits and hence increasing debt. The best and clearest explanation might be that provided by Heiner Flassbeck here http://usilive.org/podcast-web-conference-with-heiner-flassbeck/

        Your stuff about a lack of government taxation and regulation is more cliche than analysis. On the contrary! A big problem in Greece is insufficient enforcement of taxation and regulation! As Der Speigel recently reported, $261bn in illicit financial flows left Greece between 2003 and 2011 http://www.spiegel.de/wirtschaft/soziales/schwarzgeld-griechen-sollen-milliarden-ins-ausland-geschafft-haben-a-853425.html

        The ECB buying bonds alone will simply increase debt and not solve this fundamental structural problem. This is why I said not that ‘wealth’ has to be redistributed to the periphery, but that any surpluses that Germany gains FROM the periphery should be invested back into it to AVOID a redistribution of wealth.

        I don’t actually advocate a federalised system, but if the peripheral countries do not default and leave the Euro (which would be catastrophic) it will be the only option that can possible be taken if a terminal decline of Europe as a whole is to be avoided. This is what it appears that the Eurocrats and German elite wants, with Germany looking like the saviours rather than (ir)responsible, as it in fact has been.

      • Richard said:

        Hi Joshua – “Whenever you hear the term ‘bailout’ what is actually happening is an increase of the Greek debt.” – I agree, Germany government is giving money to make Greece sustainable, France, IMF, ECB etc are doing it to by the Greek government time to demolish the private economy.

        “Saying that Germany is ‘taking hits on bad loans to Greece’ is misleading because it is Germany’s own banks who have made the bad loans to Greece and that it is bailing out.” – Again I agree, the German government is being blackmailed by its own banks just like the UK and Greece. German government is taking the hit, the German banks to a lesser extent.

        “Governments technically have the ‘option’ of defaulting, but are not actually being allowed to! That is the problem! Instead of Greece defaulting, for example, a banker-dictator, Lucas Papademos, was rushed in to ensure continued compliance with the European debt increase/income reduction policy (austerity).” – I agree so we are saying that Greek has been the victim of a fascist takeover and the EU is supporting it. The only resistance is coming from the German government, you see that?

        “Hence Max’s comments about loss of sovereignty. As we have seen, this policy advocated by Germany has massively increased Greek debt,” – I am not sure where you get the idea that the German government is advocating the Greek government take out more debt. The only thing coming out of Merkel and Schauble is how the Greek government should not get any more money, this is in dispute? If you need any evidence of this look at the Greek people’s dislike of Germany because they think are not giving enough money. I can quote Merkel and Schauble in numerous occasions if required. Indeed you yourself are saying that Germany should give money to Greece implying that they are not giving enough at the moment.

        “but in addition to government spending cuts which reduce demand in the private economy” – Sorry, but this is not correct. Greeks want BMWs just as much now as they did before, the difference now is that the tax burden has increased by around 30% (fuel duties, property taxes, VAT increases, income tax increases) and private Greek banks are sucking around 2 billion Euros of credit a month out of the economy. Government spending cuts are minimal compared to these factors. In short it is not government “cuts” that are causing the depression in Greece although this is what the media in Greece and Europe is trying to portray. At best it is uniformed coverage at worst it is propaganda by socialist governments and bankrupt banks.

        “The Greek political elite is ripping off the Greek people in collaboration with the European elite, rather than in opposition to them.” – 100% agree

        “This would be rectified in absence of the common currency through devaluation of the currencies of the peripheral countries,” – This is a common line but how on earth does it help Greeks to devalue their currency? Devaluation is simply down to the central bank increasing the amount of money in circulation, this disguises the problems which the Euro is exposing. In short the problem is the Greek economy is far too regulated. The drachma devaluation does not help the Greek people, before they were a victim of massive inflation, now it is the Greek government that is the victim because it is no longer able to inflate away its debt. Which do you prefer? The Greek government not being able to borrow against future generations or the Greek people having sound money?

        “The resulting persistent current account deficits in the periphery lead to government deficits and hence increasing debt.” – The Greek government has always had a deficit, the Euro changed nothing, the Drachma simply got the Greek government out of a hole because they could print more money taking me back to my previous point. Again, the trade deficit is down to government regs and taxes.

        http://usilive.org/podcast-web-conference-with-heiner-flassbeck/ – This guy is a voice piece for socialism/fascism/banks for all the reasons I have highlighted above.

        “Your stuff about a lack of government taxation and regulation is more cliche than analysis. On the contrary! A big problem in Greece is insufficient enforcement of taxation and regulation!” – With all due respect this kind of statement can only come from someone who has zero experience of working or owning a business in Greece. There is a 5.5% difference in gov revenue as a percentage of GDP between the UK and Greece, http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP. This does not makes the case for the existence of massive tax evasion. Or perhaps it would if the taxes in Greece were oppressively high which they are now.

        With regards to the “cliche than analysis” comment, all analysis shows Greece is super highly regulated http://data.worldbank.org/indicator/IC.BUS.EASE.XQ?order=wbapi_data_value_2011+wbapi_data_value+wbapi_data_value-last&sort=asc
        in depth version of link above http://www.doingbusiness.org/rankings
        I don’t think these figures are in dispute by many people.

        “but that any surpluses that Germany gains FROM the periphery should be invested back into it to AVOID a redistribution of wealth. ” – or alternatively Greece could adopt the German policies that seem to lead to such a healthy economy. One question with your suggestion, who is going to decide how that money will be redistributed?

        “, but if the peripheral countries do not default and leave the Euro (which would be catastrophic)” – now that sounds like a cliche. Earlier you say a devaluation would be good for Greece and now you are saying it would be catastrophic for Greece to go back to the Drachma which many people say would be devalued. Which is it? Like I said earlier, the currency is not the problem, it is the massive government regulation. Also, why would it be catastrophic for Greece to leave the Euro? It was 12 years ago that Greece was outside of the Euro and it was not a catastrophe.

        “This is what it appears that the Eurocrats and German elite wants, with Germany looking like the saviours rather than (ir)responsible,” – This is completely contrary to reality. Germany is being vilified throughout Europe if not the world regarding its handling of Greece. You disagree? So how can you say Germany will look like the saviours? It has been, is and will be a complete PR disaster for Germany, where do you get the saviour bit from? Also I do not know how you can put Germany and the Euocrats in the same boat. Germany is the only one in the room saying the Euocrats have got the wrong idea and will lead us into massive inflation. They are diametric in their philosophies.

        But your line is the line of the mainstream media and is a chock full of contradictions and makes no logical sense when you look at what is actually being said by the people involved, the media commentary on the issue is completely twisted.

        If I can go back to the De Speigel article, did you look to see who runs the NGO that made that report?

        http://www.gfintegrity.org/content/view/15/136/

        Co Chair Brennan – ex World Bank (which you talked about)

        Blum – Subcommittee on Narcotics, Terrorism, and International Operations. http://www.youtube.com/watch?v=Aa6jX5j3YfU

        Heimann – CFR “Council on Foreign Relations” who now say we “need Al Qaeda” http://www.cfr.org/syria/al-qaedas-specter-syria/p28782

        Jensen – CFR

        Okonjo-Iweala – World Bank

        Whitehead – Goldman Sachs, Federal Reserve

        Also the money in Switzerland has not been given away, it is still in possession of Greeks who are in Greece. It is still available to spend unless the Greek government want to declare war on savings? Also, there is a legal system in Greece, unless these people have been prosecuted in a court of law they are innocent despite what GFI would have us believe.

      • Joshua Mellors said:

        Ok yes, I do agree with you in some respects. Of course the German people are also losing here. Everyone is.

    • Kay Fabe said:

      Hmmmm… I’m peasant stock, I am the underclass Marshall’s so afraid of, yet as an Intertel member I’ve got one of the higher registered IQs in the country. I’d suggest the reason why is I got proper nutrition as a kid so my brain was given an environment where it could thrive. Many of the underclass would be far more intelligent if their parents were better educated about what constitues good nutrition (clue; not what the government, captured by the fast food industry, says it is). Just because people are poor it doesn’t mean they necessarily have to raise stupid kids. Duh!

  4. Joshua Mellors said:

    You can also see Bill Black’s recent article tracing current economic policy and ideas of austerity to those of the English elite as they sought to purge the Irish population (who were viewed at the time as essentially non-white and ‘simian-like in the popular press): http://neweconomicperspectives.org/2012/08/why-is-paul-ryan-an-irish-catholic-praising-the-dogmas-that-drove-the-great-hunger.html

    A telling quote:
    “[existing policies] will not kill more than one million Irish in 1848 and that will scarcely be enough to do much good.”
    – Queen Victoria’s economist, Nassau Senior

    I suppose I was being non-accusatory in the article to focus on the contradiction in existing policies from a general economic (as well as humanist) point of view. Of course there are many who simply don’t care how many people die as a result of their crime and their policies, and many who may even view it as desirable. As we see from the above quotes, they tend to favour the euthanasia of the poor classes of the world, who are mostly suffering now and have always done. But at the end of the day this attitude is self-destructive because you can’t have an economy without people! What good are the assets they grab if there’s no demand for them? :)

    • Richard said:

      About the article you link to. The author’s argument is ridiculous. It is comparing a regime which was racist against its subjects, stole land from the citizens on massive scale and actively suppressed its economy to a politician who wants to cut government (granted, Ryan want to do the English type of cuts ie benefits and not payroll).

      Unless of course you start looking at taxation as theft and suppression of the economy and then things start to come together. However Bill Black does not make this association.

  5. I found this article from watching the latest episode of Max Keiser on RT! The article, while brief, was a good read in the fact that it briefly touched on the human toll of the global financial crisis. I wish there were more reporting on the human toll of this economic problem, and less talk from the ‘market fundamentalists” about how the markets are doing. In the end the people and how they are experiencing this crisis is what matters, and not necessarily how well the market is doing because while the DOW Jones may be looking good it is only for those that are actively engaged in trading while the rest are doing what ever it is they are doing to get by from day-to-day.

  6. johnosullivan said:

    Excellent article, Joshua. Like others I came here after watching your interview on Max Keiser’s RT show. While I support what you say, I would add that the key global institution plying the eugenics/malthusian dystopia is none other than the UN with the appalling Agenda 21 that few people are even aware of. Tied to Agenda 21 is the fraud of man-made global warming that advocates a tax on CO2 – literally the very breath we exhale. Much of that junk science is now being debunked by maverick independent scientists like these:

    http://principia-scientific.org/

  7. Kay Fabe said:

    Er, “In Britain, Chancellor George Osborne has stiffened his austerian resolve and, armed with his trusty printing press, is hell-bent in pursuit of a Japanese-style lost decade.” this is not the case. The Japanese are encouraged to save their money in their post office accounts. The government borrows from this source and pays interest too, which means the Japanese owe most of their debts to themselves. They pay interest to the Japanese people as individuals. What Osborne’s version of QE does is to hoover up gilts from the banks,which then become owned by the Bank of England. We own the BofE so we now own the debts and we owe them to ourselves. Many would think it sensible to null those debts but not Osborne. Still claiming the country has no money and is desperately in debt, he’s borrowing more and more from the banks at interest which we will have to pay (money they create out of thin air, we should remind ourselves at this point) and ignoring the fact that we’re now paying interest to ourselves on the gilts we now own to the tune of £31 billion. Our situation bears no comparison with the Japanese.

    • Joshua Mellors said:

      I drew a rough comparison in the sense of the central bank policy – low interest rates to keep the banks on ‘life support’ after a bubble rather than liquidating the debts. Obviously it’s a different situation in many respects. I would like to get to understand the Japanese economy much better and did think twice (if not several times) about making that cheap shot. But in the end I decided to go for it for the added effect – style over substance you know!

      • Joshua Mellors said:

        In fact I don’t think Britain will manage to pull it off at all as well even as the Japanese have.

  8. m brighton said:

    I would like to email socialjusticefirst
    is there a direct email ?

  9. Great article and excellent analysis of Europe’s present predicament.

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