Wealth and health

The BBC covers today a new report from British pressure group, Save the Children, which claims that economic growth does not necessarily translate into a healthier population.

The report cites examples such as India, which still suffers high rates of child mortality despite having undergone a prolonged period of economic growth.

This report is saying nothing new. Reading between the lines, it is a fairly standard call for governments to redistribute wealth and intervene more heavily in the economy, in order to iron out the inequalities which they perceive to perpetuate ill health.

However, economic growth certainly does improve health of the individuals who are able to benefit from it, not least because it enables people to afford better sanitation and living conditions, which are key to addressing a large part of the disease burden in less developed countries. 

The point is not everyone is able to share in economic growth, largely because of counterproductive governance.  For example, if the poor do not have property rights, it makes it impossible for them to borrow capital to invest in their own businesses and education and climb up the economic ladder.  Meanwhile, the poorest countries erect massive, costly regulatory obstacles to entrepreneurship, meaning that only the politically well-connected and rich can start businesses and create wealth.  And so on.

Save the Children are right to point out that the poor are still suffering unacceptably poor health as a result of poverty.  Their diagnosis is way off the mark, because the redistributory measures they advocate would stifle economic growth and cut off the one mechanism that is vital for improving health.

It would be more constructive for Save the Children to talk about empowering the poor instead of clobbering the rich.