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Economic Booms: Bad for Your Health / Artikel mises.org

verfasst von - Elli -, 30.06.2003, 17:56

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Economic Booms: Bad for Your Health
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By Mark Thornton

[Posted June 30, 2003]

[img][/img] In
the Austrian school's theory of the business cycle, the"boom"—even
though it sounds good--is the cause of the business cycle and all its
attendant problems. The"bust"—even though it sounds bad—is the
recovery where all the problems of the business cycle are put right. The
Austrian view is shared by many economy and stock market professionals who dub
any retreats from overdone conditions as"corrections."

The mainstream of economists however has the exact opposite
perspective—the expansion is good and the contraction is bad.
Some, including Milton Friedman, even hold to a"plucking model" of
the business cycle where the boom is the normal condition and any contraction
is just some misguided government policy"plucking" the economy
temporarily downward off its normal trajectory. In this view, the boom is an
unmitigated good state of affairs, and the bust is an unnecessary and absolute
bad event.

One very large body of statistical data that hints the
Austrians are correct—and the mainstream has neither paddle or rudder—is
the evidence on human health and mortality. The evidence strongly supports the
idea that when an economy goes into recession, humans become healthier and the
rate of death decreases.

Sustained long-term economic growth, of course, is good for
human health and life expectancy. Americans today are healthier and have
longer life expectancies than Americans of 1900 or 1800. Life expectancy is
longer and child mortality is lower in wealthy countries compared to poor
countries. Americans are healthier than Africans and Asians because of higher
levels of wealth and income. Poverty is clearly not good for your health.

But what about the business cycle when government generates
periods of overly speculative investing and even stock market hysteria
followed by unemployment and bankruptcy? What are the health consequences of
an economic frenzy fueled by money creation?

Four statistical studies using data from all 50 American
States, 50 Spanish Provinces, 16 German States and 23 OECD Countries have
found that increases in unemployment correlate with a decrease in the rate of
death. For example, Christopher Ruhm, an economist at the University of North
Carolina at Greensboro found that a one-percent increase in the unemployment
rate is correlated with a one-half percent decrease in the rate of death.*

Surprisingly, no calls have been forthcoming from the
economics profession to decrease the money supply by 99% which would
supposedly increase the unemployment rate to 99% and therefore lead to virtual
human immortality.  Not surprisingly, even when mainstream economists and
government bureaucrats become enlightened to the fact that health improves
during recessions, they fail to make the connection that the boom phase of the
business cycle is bad for human health and life expectancy.

The reasons for the statistical relationship between health
and the economy should be obvious for all to see, but most are blinded by
obedience to the notion that stock market and economy-wide booms are all-out
good for us. Here are some reasons to think otherwise:

<ul>
~ During the boom more people are working than normal and
they are working longer hours. This means that we collectively have less
time for exercise—a prime ingredient of good health.       
~ During the bust, people have more time to exercise. Not
surprisingly, after the"longest peacetime expansion in U.S. history"
Americans had become the fattest people in the history of the planet.       
~ The boom also means that people have less time for sleep,
while during the bust there is more time for sleep, rest, and relaxation.
Not only does a good night sleep make you more productive at work, better
able to learn, and have fewer wrinkles on your face, it also helps you
live longer.       
~ As the great boom of the 1990s came to an end, Americans
had become the most sleep-deprived population on the planet, popping
record amounts of sleeping aids to go along with all their psychotherapy
pharmaceuticals.       
~ The combination of fatter paychecks, larger stock market
portfolios, and less free time during the boom phase mean that people are
more likely to eat"fast food," engage in thrill seeking
activities, and to overtax themselves with duties and obligations—thus
driving up their stress levels.       
~ Recessions are difficult too, especially for the
unemployed breadwinner, but people are more likely to return to normal
lifestyles and engage in less stressful activities and home production—like
home cooked meals, gardening, and fixing things around the house.</li>
</ul>

James Grant ends his great book, The Problem with
Prosperity** with a chapter titled"Reversion to the Mean." His
point is that all booms cause and eventually result in a bust.

In Ruhm's statistical analysis he finds a similar type of
"reversion to the mean" behavior related to health. When the economy
goes into recession, or the correction phase, not only do people lose weight,
but the fattest people lose the most weight. Also, the recession leads smokers
to moderate their habits and for obsessive smokers (40 or more cigs a day) to
cut back the most. Both results suggest a return to moderation, normalcy, and
healthier lifestyles.

I'm sure that the more lifestyle statistics and surveys
examined, the more evidence that would pile up in favor of the notion that the
"boom" is bad for you. The Austrians have taught that inflation is
analogous to a drug that"stimulates" and eventually kills the
patient. Bastiat has shown that the inflation mentality can lead to perpetual
world war. Health statistics have now conclusively shown how inflation of
money and credit, along with the boom in the economy and stock market, kills
us in our individual daily lives.


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Mark Thornton is a senior
fellow of the Mises Institute. Send him MAIL.
See his Mises.org Articles
Archive and his scholarly pieces in the QJAE,
the RAE,
and the JLS.

* Christopher Ruhm,"Healthy
Living in Hard Times," NBER Working Paper No.
9468 (Cambridge, MA: National Bureau of Economic Research) February 2003.

** James Grant, The Problem with Prosperity: The Loss of
Fear, the Rise of Speculation, and the Risk to American Savings (New York,
NY: Random House) 1996. See his AEN
interview.

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Economic Booms: Bad for Your Health / Artikel mises.org - - Elli -, 30.06.2003, 17:56