Chapter 7: Enhancing Human Capital
Enhancing Human Capital Through Better Health
Good health is good for the economy. A National Bureau of Economic Research (NBER) paper showed that a one-year improvement in a country’s life expectancy (an index of health) contributes to a four percent increase in its economic output, and that good health has a greater impact on the economy than work experience or years of schooling.
The World Health Organization’s (WHO) Commission on Macroeconomics and Health (CMH) Report reaffirms the powerful link between health, poverty reduction, and economic growth. The report challenges the traditional argument that health of the citizens will automatically improve as the result of economic growth. Indeed the opposite is true; improved health is a critical requirement for economic development in poor countries.
Spending relatively small sums of money on basic public health measures and peri-natal and maternal care yields considerable returns in terms of increased economic output through improved health and productivity of the citizens. This alone justifies such expenditures quite apart from the humanitarian arguments.
The diseases that have such a crippling impact on human productivity and thus economic growth are the common infectious diseases that have been successfully eradicated in modern societies. The exception is HIV/AIDS. The others (gastroenteritis, tuberculosis, malaria, dengue, and measles) can be easily prevented through simple and cheap public health interventions. Cuba is an outstanding example of what can be achieved with meager resources. Cuba has much better health indices than many wealthy countries because it rightly emphasizes community health. Even diseases like HIV/AIDS that are terribly expensive to treat are amenable to cost-effective preventive public health measures. San Francisco leads the world in introducing innovative and non-intrusive measures that have significantly reduced the number of new HIV/AIDS cases through such measures as effective sex education, wider availability of condoms, and clean needle exchange programs.
The WHO Report is based on studies of some of the poorest countries. Its findings cannot however, be extrapolated to advanced nations. In America the concern is the opposite, that is, escalating health care cost is crippling the economy. America now spends close to 14% (and rising rapidly) of its GDP on medical care, with no corresponding improvement in the health indices of Americans.
The current all-consuming effort in America is to rein in the costs of medical care. Beyond a certain point there is little advantage of pouring more money into health care. I fail to see the benefits to society of expanding resources to enable an 80-year-old for example, to get a heart transplant or expensive chemotherapy.
A word of caution: we need to discern between cause and effect. Certainly if one were economically well off and could afford good nutrition, adequate housing, and modern medical care, those would contribute greatly to good health and increased longevity. Good health may thus be the consequence rather than the cause of economic growth. Nonetheless one can also intuitively agree that a population that is sick and malnourished will not be very productive.
Contrary to widespread belief, the truly effective medical interventions are cheap, safe, and relatively simple. The lowly eyeglasses greatly extend the productive and quality of life of everyone. Work-rule modifications such as using safety harnesses and protective gears save many workers’ lives and limbs. At American construction sites, everyone wears hard hats, including visitors. Roadside workers wear reflective yellow attires for easy visibility. Stringent adherence to work-rule safety, reinforced by hefty fines for those not complying, has made the American workplace remarkably safe and healthy.
The impact of health on productivity is not generally appreciated because it is hidden. When someone is incapacitated or unhealthy, one simply considers that to be part of the normal rhythm of life. He is sick or injured and cannot work, and that’s it; we never consider the lost opportunity of that individual’s talent being sidelined. To concretize my argument, consider this. If Mahathir had not had his life-saving heart surgery in 1989, imagine the loss of his considerable subsequent contributions. Similarly, had the late Tun Razak’s leukemia been detected earlier and effectively treated, no telling the wonders he would have performed for the nation.
When the great singer and composer P. Ramlee died at the peak of his career (also of heart attack), few wondered of the songs not written, music not composed, and movies not shot. But we all fondly remember his great songs. The gifted entertainer Sudirman, taken away in the prime of his youth, was similarly an incomparable loss. Imagine the flowering of his enormous talent had he lived longer.
Muslims in particular, because of our religious fatalism, do not dwell much on such matters. We consider death the will of Allah. Yes, Allah may decide when our time will be up but that does not mean we should not take care of our health, vaccinate our children, and drive carefully. As our prophet (pbuh) so wisely observed, yes, trust in Allah but first tie up you camel securely; only then would you pray to Allah that it does not escape.
Investments in preventive and pubic health give the highest returns relative to the cost. Adequate maternal and perinatal cares greatly reduce both infant and maternal mortalities, and can be delivered cheaply with minimal advanced technology or expertise. Vaccinating all children, for example, would pay dividends far in excess of the costs. The cumulative cost of treating one polio patient would pay for the vaccination of millions.
There are other simple public health measures that would also greatly improve citizens’ health. The provision of potable water and adequate sewer system would greatly reduce many enteric diseases. UN agencies had designed simple and cheap outhouses suitable for rural areas. By mass-producing them, the government would greatly reduce its unit costs and pass on the savings to citizens. Diseases like cholera still plague Malaysia, a reflection of its appalling standard of public health. Cholera is non-existent in the West simply because of clean community water and effective sewer treatment.
Another major killer in Malaysia is trauma, in particular road accidents. Trauma involves mostly young adults, previously healthy and productive citizens at the peak of their careers. Most accident victims have many more years of productive life ahead of them. The sad aspect of highway accidents is that they are preventable. Yet Malaysia simply ignores the problems and instead put all the blame on the drivers. True, Malaysian drivers are reckless, tailgating at high speed and suddenly changing lanes without signals. In part this is attributable to the fact that freeways are new to Malaysia and drivers are not familiar with the road dynamics and dangers imposed by cars traveling at high speed. In the West automobile accident injuries have been greatly reduced through better-designed cars (airbags and seatbelts), well-engineered roads, high visibility signage, and improved driver training. Driver education is mandatory in American high schools. Many states are also experimenting with graded licenses for teenagers instead of giving them the full license at once.
The impact of well-engineered roads on fatalities was dramatically demonstrated in my California practice. Twenty years ago I saw many mangled traffic accident victims in the emergency room. I have done more than my share of fixing busted livers and broken limbs. Those were the lucky ones, the ones who managed to arrive at the hospital alive. Many more were dead at the scene of the accident. The reason was that the highway into the town was not divided and people were driving as if it were a freeway. Repeated public campaigns to caution motorists, including increased police enforcement, did not make a dent. Ten years ago the road was upgraded into a divided freeway complete with a median barrier, and suddenly the number of accidents and fatalities plummeted. The savings of lives and medical expenses more than recouped the cost of the highway improvement.
The carnage on Malaysian roads is truly horrifying. The accident rates, adjusted for the number of registered vehicles, are nearly three times that of Western nations. Malaysian roads are poorly engineered, lack a median, poorly maintained, and over strained. I have often wondered that should a rigorous economic analysis be made, it would be far more effective, in terms of number of lives saved and maimed bodies prevented, to improve the roads than to build hospitals and medical schools.
There are other cheap public health measures that would save millions by reducing the expenditures on medical care. Case in point: smoking, a significant health risk worldwide. Lung diseases like cancer and emphysema, together with premature heart diseases, hardening of the arteries, and strokes are directly attributable to smoking. Discouraging and curtailing smoking would reduce immensely the related medical costs. California successfully reduced smoking through a combination of tough public health measures like banning smoking in public places and strict prohibition against selling the product to minors. California also imposed “sin” taxes making cigarettes expensive and thereby decreasing consumption. There are also aggressive public health campaigns against smoking targeting the young. Today California has the lowest per capita cigarette consumption.
I would go further and nationalize the distribution and marketing of tobacco. Once the industry has the efficiency of the postal service, where one has to wait in line to buy cigarettes, the consumption would surely go even lower. Canada, in an effort to reduce alcohol consumption, has laws where the product can only be distributed and sold by a government agency. In this way it also gets to keep the revenue!
We must distinguish between real medical advances (which are effective as well as cheap) and what the American pathologist Lewis Thomas called “halfway technology” advances which are dramatic and expensive but of limited utility. A ready example would be the advances in the treatment of polio. In the 1950’s we had a number of those halfway technologies used in treating polio patients. Vast engineering skills were consumed in designing better iron lungs for paralyzed patients. Creative orthopedic surgeons were performing a variety of ingenious operations to strengthen muscles and stabilize joints of these unfortunate victims. These were very expensive; they were also all halfway technologies.
Then came real advance with the development of the polio vaccine. It is very cheap and effective. Today polio is essentially wiped out. Meanwhile all those elaborate iron lungs and textbooks on the delicate surgeries –quaint reminders of halfway technology – are now seen only in medical museums.
I am not suggesting that all expenditures on health care bear such dramatic returns. Beyond the basic public health and preventive measures discussed above, the benefits of ever increasing expenditures on medical care produce rapidly diminishing returns. In America, nearly percent of the Medicare (a federal medical program for those over 65) dollars are spent on patients who would die within six months.
One of the diseases that have the greatest impact on the productivity and longevity of citizens is malaria. Someone once made the remarkable observation that Rachel Carson (the author of Silent Spring, a book that raised so much public consciousness on the dangers of chemicals) was responsible for more deaths than Hitler. It was her crusade that led to the banning of one of the most effective pesticides against mosquitoes, DDT, and with that came a resurgence of malaria and its terrible toll. At the public health level, DDT was indeed a major advancement: cheap and effective. But on a broader ecological consideration, it represented a halfway technology. Real advance would be an effective vaccine against malaria or an effective biotechnology weapon specifically targeting the offending mosquito specie.
While waiting for that real technology, there is much that can be done to reduce the incidence of vector-borne diseases like malaria and dengue. In my childhood mosquito nets were essential. One would never sleep without being covered by one. Today I rarely see them in Malaysian homes. Malaysians have been lulled by the wonders of chemicals. Similarly, covering roadside ditches and drains, cutting grass and bushes, and clearing the garbage would all reduce the vector population.
A major breeding ground for mosquitoes is septic tanks. A health engineer in Sarawak ingeniously designed a mechanism to prevent this by having foam balls fill the venting duct. In this way the gas could escape but not the mosquitoes – a cheap yet effective innovation.
We do not need the empirical studies of the NBER or WHO to convince us that investing in the health and well being of our citizens is the right thing to do. That it also enhances economic growth is merely icing on the cake.
Next: Enhancing Human Capital Through Education
