The Body Economic (32 page)

17
. Ibid. Iceland's inequality rose markedly before the crash. The debt burdens were also disproportionately held. Additionally, 440 families have debts in excess of their assets of USD $400,000 or more. Of Iceland's 182,000 families, 81,000 have assets below $40,000, whereas 1,400 families have assets of $1.2 million or more.

18
. This conclusion was largely based on studies that found national healthcare spending tended to rise as economies grew (J. P. Newhouse. 1977. “Medical-care Expenditure: A Cross-National Survey,”
Journal of Human Resources
. As a more recent paper explains, “The General Finding Has Been That Income Elasticity Estimates Exceed Unity, Implying That Health Care Is a Luxury Good.” Cited in J. Costa-Font, et al., “Re-visiting the Healthcare Luxury Good Hypothesis: Aggregation, Precision, and Publication Biases?” HEDG Working Paper 09/02, 2009. Available at:
http://www.york.ac.uk/media/economics/documents/herc/wp/09_02.pdf
. The health minister was publicly outspoken about the need to bolster health systems. In his resignation, he noted that he could not follow the government stance to continue the negotiation process to repay IceSave and the large fiscal consolidation that would result.

19
. Personal communication with D. Stuckler, European Health Forum at Gastein, Austria, 2009.

20
. In Europe we estimated the defense multiplier was negative. See A. Reeves, S. Basu, M. McKee, C. Meissner, D. Stuckler. In press. “Does Investment in the Health Sector Promote or Inhibit Economic Growth?”
Health Policy
.

21
. The last time a referendum had been called in Iceland was in 1944, when Iceland voted in de pen dence from Denmark.

22
. Iris Erlingsdottir, “Iceland Is Burning,”
Huffington Post,
Jan 20, 2009. Available at:
http://www.huffingtonpost.com/iris-lee/iceland-is-burning_b_159552.html

23
. Ibid.

24
. This vote should not be taken to indicate that all Icelanders agreed, particularly since not all voters turned out to the referendum. There had previously been a divisive debate about whether to repay IceSave's loans and shoulder the debt and austerity that would result. In this process, IMF economists issued conflicting messages to the Icelandic media: at times arguing not to socialize private debt, but also advising on its repayment and associated fiscal consolidation.

25
. Friedman led the push for Central Bank Independence, to divorce economic decision-making about interest rates and the money supply from democratic accountability.

26
. Wade and Sigurgeirsdóttir, “Lessons from Iceland.”

27
. Sigurgeirsdóttir and Wade, “Iceland's Loud No.”

28
. See D. Stuckler, C. Meissner, L. King. 2008. “Can a Bank Crisis Break Your Heart?”
Globalization & Health
v4(1). Available at:
http://www.globalizationandhealth.com/content/4/1/1
. See G. R. Gudjonsdottir, et al. 2012. “Immediate Surge in Female Visits to the Cardiac Emergency Department Following the Economic Collapse in Iceland: An Observational Study,”
Emerg Med J
v29:694–98.

29
. S. Sigurkarlsson, et al. 2011. “Prevalence of Respiratory Symptoms and Use of Asthma Drugs Are Increasing Among Young Adult Icelanders,”
Laeknabladid
v97(9): 463–6 7. H. K. Carlsen, et al. 2012. “A Survey of Early Health Effects of the Eyjafj allajokull 2010 Eruption in Iceland: A Population-based Study,”
BMJ Open
v2:e000343.

30
. A. Kleinman, The
Illness Narratives: Suffering, Healing, and the Human Condition
(New York, 1988).

31
. C. McClure, et al. 2013. “Increase in Female Depressive Symptoms Following the 2008 Financial Crisis in Iceland: A Prospective Cohort Study.” Forthcoming.

32
. J. Helliwell, R. Layard, J. Sachs.
World Happiness Report
(New York, 2012). See Figure 2.11, average positive affect by country, based on the GWP 05–11. One explanation that has been proposed is that during the crisis Iceland experienced a rising degree of political openness. Discussion and debate, previously suppressed during the boom years, emerged, increasing people's happiness and life satisfaction.

33
. T. L. Asgeirsdottir, et al. “Are Recessions Good for Your Health Behaviors? Impacts of the Economic Crisis in Iceland.” Working Paper 18233. National Bureau of Economic Research, Cambridge, MA, 2012.

34
. D. Batty, “McDonald's to Quit Iceland as Big Mac Costs Rise,” The
Guardian,
Oct 27 1999. Available at:
http://www.guardian.co.uk/world/2009/oct/27/mcdonalds-to-quit-iceland
; C. Forelle, “Fishing Industry Aids Iceland's Recovery,”
Wall Street Journal,
May 18, 2012. Available at:
http://live.wsj.com/video/fishing-industry-aids-iceland-recovery/E1ED2AC5-D98B-4760-844E-67F8BA64A136.html

35
. A member of Parliament from the Independence party has also proposed the plan to privatize the state-alcohol monopoly in early 2009.

36
. EuroStat. Statistics. Available at:
http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
; P. Gobry, “No, the United States Will Not Go into a Debt Crisis, Not Now, Not Ever,”
Forbes,
Oct 19, 2012. Available at:
http://www.forbes.com/sites/pascalemmanuelgobry/2012/10/19/no-the-united-states-will-not-go-into-a-debt-crisis-not-now-not-ever/
. Iceland's rise in social spending was significant even after adjusting for the fall in GDP, as a result of maintaining the automatic stabilizers built into its social protection system.

37
. OECD. Economic Survey of Iceland, 2011. Available at:
https://community.oecd.org/docs/DOC-27221/diff?secondVersionNumber=2

38
. EuroStat. Statistics. Available at:
http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
; “Fighting Recession the Icelandic Way,” Bloomberg.

This corresponded to a series of suicides that garnered headlines in Spain. See, for example, M. Bennett-Smith, “4th Eviction-Motivated Suicide Rocks Indebted Spain; Protesters Shout Eviction Is ‘Murder',”
Huffington Post,
Feb 15, 2013. Available at:
http://www.huffingtonpost.com/2013/02/15/4th-eviction-suicide-spain_n_2697192.html
; IMF Country Report No. 12/89, April 2012, 2012 Article IV Consultation and First Post-Program Monitoring Discussion. See p. 6, Box 1: Safeguarding Iceland's social welfare system. Available at:
http://www.imf.org/external/pubs/ft/scr/2012/cr1289.pdf
. The social democratic party government had raised the minimum income guarantee in 2007/2008 to protect the most vulnerable group of retired persons, which came into effect in 2008/2009. Such programs were planned prior to the crisis and upheld during it. See Welfare Watch, The
Welfare Watch Report to the Althingi.
[English translation].
Ministry of Social Affairs and Social Security, Iceland, Jan 2010. Available at:
http://eng.velferdarraduneyti.is/media/velferdarvakt09/29042010The-Welfare-Watch_Report-to-the-Althingi.pdf

39
. For an analysis of how Iceland's social capital helped promote resilience, see K. Growiecz, “Social Capital During the Financial Crisis. The Case of Iceland.” 2011. Available at:
https://renewal.hi.is/wp-content/uploads/2011/05/KatarzynaSocial-Capital-during-Financial-Crisis-Growiec.pdf
; OECD, Society at a Glance 2011: OECD Social Indicators. Available at:
http://www.oecd-ilibrary.org/sites/soc_glance-2011-en/06/01/index.html?contentType=&itemId=/content/chapter/ soc_glance-2011-16-en&containerItemId=/content/serial/19991290&accessItemIds=/content/book/soc_glance-2011-en&mimeType=text/html

40
. EDA, Oct 12, 2009. Film review. Available at:
http://www.economicdisasterarea.com/index.php/features/eda-film-review-god-bless-iceland-not-enough-mustard/

41
. S. Lyall, “A Bruised Iceland Heals amid Europe's Malaise,”
New York Times,
July 8, 2012. Available at:
http://www.nytimes.com/2012/07/08/world/europe/icelands-economy-is-mending-amid-europes-malaise.html?pagewanted=all&_r=0
“Fighting Recession the Icelandic Way,” Bloomberg. Fitch upgraded Iceland's sovereign rating from BBB- to BB+. See also BBC, “Iceland Debt ‘Safe to Invest' After Ratings Upgrade,” Feb 2012. Available at:
http://www.bbc.co.uk/news/business-17075011

42
. As the IMF further explained, rather than through austerity, fiscal adjustment was achieved by introducing greater taxes on the wealthy and focusing cuts outside of social welfare programs: “A key post crisis objective of the Icelandic authorities was to preserve the social welfare system in the face of the fiscal consolidation needed to put public finances on a sustainable path. With unemployment rising fast and real wages plummeting, it was recognized early on that the social impact of the crisis would be significant. Thus, in designing the fiscal consolidation, the authorities sought to protect vulnerable groups, notably by introducing a more progressive income tax, increasing only the upper VAT rate, and focusing expenditure cuts on areas where efficiency gains could be made—thereby creating space to preserve social benefits.” IMF, “Iceland: Ex Post Evaluation of Exceptional Access Under the 2008 Stand-By Arrangement,” IMF Country Report No 12/91, 2012. Available at:
http://www.imf.org/external/pubs/ft/scr/2012/cr1291.pdf
; the IMF further explained that “the
social impact
can be eased in the face of fiscal consolidation following a severe crisis by cutting expenditures without compromising welfare benefits.”

43
. Sigurgeirsdóttir and Wade, “Iceland's Loud No”; R. Milne and J. Cumbo, “Ex-Iceland Bank Chief Convicted of Fraud,”
Financial Times,
Dec 30, 2012. Available at:
http://www.ft.com/intl/cms/s/0/76ff5a36-525e-11e2-aff0-00144feab49a.html#axzz2IT1E9eU8
. They went even further by hiring bounty-hunters (called “neo-vikings” by the Icelanders) to track down bankers who fled from imprisonment. See Charlotte Chabas, “Comment l'Islande traque ses ‘néo-vikings' de la finance, responsables de la
crise,”
Le Monde
, July 11, 2012. Available at: abonnes.lemonde.fr/europe/article/2012/07/11/l-islande-traque-ses-neo-vikings-de-la-finance-responsables-de-la-crise_1728783_3214.html?xtmc=islande&xtcr=2#reactions

44
. R. Robertsson, “Voters in Iceland Back New Constitution, More Resource Control,” Reuters, Oct 21, 2012. Available at:
http://www.reuters.com/article/2012/10/21/us-iceland-referendum-idUSBRE89K09C20121021
. For details about the innovative crowdsourcing model used to draft the constitution, see Philippa Warr, “Iceland Vites for Crowdsourced Constitution,”
Wired,
Oct 23, 2012. Available at:
http://www.wired.co.uk/news/archive/2012–10/23/iceland-crowdsourced-constitution

45
. Source for Figure 4.1: EuroStat 2013 Statistics. Gross domestic product is seasonally adjusted and adjusted by working day, compared with the previous year. Note: Greece data are the latest available at the time of this writing.

46
. Felixson,
God Bless Iceland
.

Chapter 5: Greek Tragedy

1
. Law 4075/11.04.2012 amended article 13 of Presidential Decree 114/2010 on the “establishment of a single procedure for granting the status of refugee or of beneficiary of subsidiary protection to aliens or to stateless persons in conformity with Council Directive 2005/85/EC on minimum standards on procedures in Member States for granting and withdrawing refugee status (Law 326/13.12.2005).” Cited in Human Rights Watch, Joint letter to UN Special Rapporteur on Health, May 2012. Available at:
http://www.hrw.org/news/2012/05/09/joint-letter-un-special-rapporteur-health

A. Kentikelenis, M. Karanikolos, I. Papanicolas, S. Basu, M. McKee, D. Stuckler. 2011. “Health Effects of Financial Crisis: Omens of a Greek Tragedy,” The
Lancet
v378(9801): 1457–58; D. Paraskevis and A. Hatzakis, “An Ongoing HIV Outbreak Among Intravenous Drug Users in Greece: Preliminary Summary of Surveillance and Molecular Epidemiology Data,” EMCDDA Early Warning System, 2011.

See also “Shocking Rise in HIV Infections, Health Ministry Reports,”
Athens News,
Nov 21, 2011. Available at:
http://www.athensnews.gr/portal/9/50680

2
. Following riots in 2008 Greece was labeled as “the sick man of Europe.” See EurActive, 2008. Available at:
http://www.euractiv.com/socialeurope/greece-appear-sick-man-eu-summit-news-220919
; A. Carassava, “Euro Crisis: Why Greece Is the Sick Man of Europe,”
BBC News Europe,
2011. Available at:
http://www.bbc.co.uk/news/world-europe-16256235

3
. On the morning of May 1, Loverdos and his team went from brothel to brothel, 315 in all, detaining 275 prostitutes (and a few stray immigrants). He then subjected them to public humiliation. Their photographs and identities were published, and blood samples were taken from them. When twenty-nine of these women tested positive for HIV, Loverdos had them prosecuted for “intended injuries” to the public.

Charlotte McDonald-Gibson, “The Women Greece Blames for Its HIV Crisis,” The
Independent,
July 25, 2012. Available at:
http://www.independent.co.uk/news/world/europe/the-women-greece-blames-for-its-hiv-crisis-7973313.html
;
Rights Equality & Diversity European Network, 2012. Minister of Health speaks of “sanitary bombs” in Athens center due to foreign prostituted women. Photos published by the police in Fileleftheros, 04.05.2012,
Στη δημοσιóτητα τα στοιχεíα άλλων πέντε ιερóδονλων, αντιδράσειζ για το μέτρο
(Published details of five other prostitutes, reactions to the measure). Available at:
http://www.philenews.com/el-gr/Eidiseis-Ellada/23/103185/sti-dimosiotita-ta-stoicheia-allon-pente-ierodoulon-antidraseis-gia-to-metro
. Accessed April 5, 2012; D. Gatopoulos, “Greece Arrests 17 HIV-Positive Women in Brothels,” The
Guardian
, May 2, 2012. Available at:
http://www.guardian.co.uk/world/feedarticle/10224544
. In total the number of positive cases reached twenty-nine. See “Five of First 100 Men Checked After Unprotected Sex with HIV+ Prostitutes Test Positive,” Athens New Agency, May 9, 2012. Available at
http://www.accessmylibrary.com/article-1G1-289305377/five-first-100-men.html
; McDonald-Gibson, “The Women Greece Blames for Its HIV Crisis.”