Richard Eckersley on the mental health crisis

The following article by Australia 21 Director and Fellow Richard Eckersley was published in The Canberra Times, 24 June 2010.  See the article as published here.

Cash grab hurting wellbeing

Cultural changes towards extrinsic goals – like financial success – are adding to pressures on young people, Richard Eckersley writes.

The resignation of the Federal Government’s top mental health adviser, John Mendoza, is just the latest episode in the unfolding mental health crisis in Australia. Professor Mendoza, the chair of the National Advisory Council on Mental Health, quit last week saying he was deeply disappointed at the Government’s lack of vision and commitment to mental health.

The crisis goes deeper than even many psychiatrists and psychologists, let alone governments and the public, realise. Addressing it requires more than increasing funding for mental health services. Our understanding of the causes of the situation remains a contentious matter among researchers, but there is growing evidence that they lie deep in the psychological impacts of the changing culture of Australia and other Western societies.

Most mental illness begins in adolescence and early adulthood and concerns about mental health care for young people are a prominent feature of the current debate, championed by the 2010 Australian of the Year, Professor Pat McGorry.

Earlier this year, American psychologist Jean Twenge and her colleagues published the findings of a remarkable study, in which they compared the results of the oddly named but widely used psychological test, the Minnesota Multiphasic Personality Inventory, or MMPI, going back to the 1930s.

The researchers found a steady decline in the mental health of college students between 1938 and 2007 and high-school students between 1951 and 2002. Five times as many college students now score high enough to indicate psychological problems as they did in 1938. The increases translate into a greater likelihood of characteristics such as moodiness, restlessness, dissatisfaction and instability; unrealistically positive self-appraisal, overactivity and low self-control; feeling isolated and misunderstood; sensitivity and sentimentality; and being narcissistic, self-centred and antisocial.

The findings are not conclusive. Critics point out that people might just be becoming more willing to endorse items indicating psychological problems (although Twenge says the MMPI allows researchers to test for this bias, which they did; the trends remain).

Another new study, conducted by British psychologist Stephan Collishaw and colleagues, found that English adolescents experienced considerably higher rates of emotional problems in 2006 than they did in 1986, especially girls. The greatest changes were for worry, irritability, fatigue, sleep disturbance, panic and feeling worn out or under strain; the more severe the reported symptoms, the larger the increase over the two decades.

A few months ago, I looked up the most recent results of national surveys conducted by the American College Health Association. The survey shows that large proportions of students report strong negative emotions for both the previous twelve months and the previous two weeks. For example, 47 per cent in the last twelve months (and 17 per cent in the last two weeks) had felt things were hopeless; 87 per cent (54 per cent) had felt overwhelmed by all they had to do; 82 per cent (50 per cent) had felt exhausted; 31 per cent (10 per cent) had felt so depressed that it was difficult to function; 49 per cent (19 per cent) had felt overwhelming anxiety; and 39 per cent (12 per cent) had felt overwhelming anger.

Although I have been steeped in data like these for over 20 years, I find the figures shocking, even hard to believe. I’ve asked colleagues here and in the United States and Britain what the findings mean. I think it is fair to say that we don’t know for sure. They are certainly not the whole story of young people’s lives.

Had they been asked, 80-90 per cent of the students would have said they were happy and satisfied with their lives; most would be leading seemingly normal lives: attending lectures, completing assignments, working, partying and dating. At the same time, I think these findings tell us something about being young today, including specific social problems such as youth violence and binge-drinking.

The disturbing picture is likely to be broadly true of Australians (we lack comparable data over time to assess trends here). What explains it? There are many possibilities, including changes in family life such as more family conflict and breakdown, increasing work-life pressures and changes in parenting. The growth of the media and communications technologies, the weakening influence of religion, more junk food and other changes in diet, and even chemical pollution might be involved.

Twenge and her colleagues considered – and rejected – the possibility that economic factors were responsible. Instead they favoured a cultural explanation – in particular, a shift from intrinsic to extrinsic values and goals. An intrinsic orientation means doing things for their own sake – because we want to do them. It is ‘self –transcending’ and is good for our wellbeing.

An extrinsic orientation means doing things in the hope or expectation of other rewards - status, money, appearance, recognition. It is ‘self-enhancing’ in the sense of being concerned with self-image. It is not good for our wellbeing. A focus on the external trappings of success and ‘the good life’ encourages unrealistic and misguided expectations and increases the pressure to perform and achieve, leading to stress, frustration, resentment and dissatisfaction.

One American student says in an Associated Press article on Twenge’s findings that she feels pressure to be financially successful, even when she doesn't want to be. ‘The unrealistic feelings that are ingrained in us from a young age — that we need to have massive amounts of money to be considered a success — not only lead us to a higher likelihood of feeling inadequate, anxious or depressed, but also make us think that the only value in getting an education is to make a lot of money, which is the wrong way to look at it.’

The results of regular surveys over more than forty years of how American college students rate the importance of various life goals confirm her observation. The biggest change has occurred in the two goals of ‘developing a meaningful philosophy of life’ and ‘being very well off financially’. Meaning declined sharply in importance during the 1970s and 1980s, while money rose to become the highest rated goal.

Youth problems today are more the result of existential and relational deprivation than material and economic deprivation. Our individualistic, consumer culture relentlessly and ruthlessly promotes extrinsic values and norms, making it harder for us to develop a grounded sense of who we are and what we want in life, and distracting us from what matters most to our wellbeing: our relationships with other people.

Australian novelist Ruth Park, in describing growing up in New Zealand during the Depression, says of young people then: ‘Whatever hardship came our way was all on the outside. Inside we knew, without doubt, that Life was aware of us and somehow had us in its care’. It strikes me as a good description of intrinsic worth and existential certainty and confidence.

Richard Eckersley is a director of Australia 21, an independent, non-profit research company and a visiting fellow at the Australian National University.

Reclaiming our financial sectors

Australia 21 Fellow Ross Buckley, Professor of International Finance Law at the University of New South Wales, writes that the Australian government should swing its support behind the growing international campaign for a banking levy, and then it should join the push for a financial transactions tax.

The aim of the “levy” in the form of a small tax on bank assets, profits and staff remuneration would be to set aside funds to finance future bailouts. The more important role of the transactions tax would be to cool off the flow of speculative funds swirling around the world by taxing transactions at a percentage rate that would be trivial for medium and long term investments, but onerous for computer programmed “investments” that might only last for periods measured in seconds.

Support for the levy seems to be gaining ground, the Australian Government being one of the few arguing against it. Gathering enough support for the transactions tax to be implemented will be a far tougher nut to crack.

Read Professor Buckley’s full article, published on the website Inside Story, published by the Institute for Social Research at Swinburne University, in association with the Australian National University. The article may be accessed here.

Climate Institute launches report on renewable energy

The Sydney based Climate Institute has launched an important report, Renewable energy investment opportunities and abatement in Australia, preparation of which was commissioned by the Institute and Westpac. The report was prepared by Bloomberg New Energy Finance.

In his preface to the report, Climate Institute CEO John Connor says:

Global low-carbon investments and industries are growing rapidly and Australia’s innovative and forward thinking businesses are tapping into these opportunities.

The Climate Institute and its Climate Partner companies have come together because we share a resolve that Australia shouldn’t be left behind in the journey that other economies and companies are undertaking towards the expected multi – trillion dollar markets already emerging in clean energy and pollution reduction.

As a model for future individual and collective Climate Partner initiatives, Westpac and The Climate Institute commissioned Bloomberg New Energy Finance to assess global trends in clean energy investment, the recent and future outlook for Australia and the implications of this for Australia’s pollution reduction targets.

Globally, 2010 is expected to see record new investment in renewable energy. This is expected to occur on the back of increasing levels of asset investment in China and as more of the USD184 billion in global clean energy stimulus money starts flowing into the sector in the USA and similarly in other major economies.

In Australia, despite having world class renewable energy resources, investment in renewable energy has historically been subdued and Australia still contributes a very small fraction of total global investment in clean energy – reaching 2.4% of total investment in Asia and 0.8% of the global total in 2009.

Investors need certainty around climate policy and a long, loud and legal framework for a price on climate pollution so Australian business can take full benefit of opportunities in a global low-carbon economy. Assuming the Renewable Energy Target (RET) passes the Parliament, Australian investors will potentially have access to a $20 billion opportunity in clean energy.

The RET has the potential to deliver emission reductions of around 120 million tonnes over ten years to 2020, beginning the transformation of the energy sector in Australia. In the process previous research commissioned by The Climate Institute shows that thousands of new jobs would be created.

The Bloomberg New Energy Finance report also sends a warning though that a sectoral approach will not put Australia on track to meet current international commitments to reduce emissions. Without policies across the economy that ensure that companies and individuals take responsibility for the pollution they cause, many low cost pollution reduction measures will not get investment backing.

Australia will not be competitive in the emerging global low-carbon economy and will fail to meet our national commitments to reduce emissions without a carbon price to drive medium and long term investments in clean technologies and climate solutions. Policies to limit climate pollution and put a price on carbon are inevitable.

That is why partnerships between business and the community such as the one established by the Climate Institute are so vital in identifying key barriers to be overcome, and the solutions required, to achieve long term emission reductions and positive competitive outcomes for Australia.

The full report may be downloaded from here.

International Conference on Sustaining Natural Capital

The Preliminary Program has been released for an international conference on Sustaining Natural Capital and Ecosystem Services, to be held at Salzau Castle, near Kiel, from 8-10 June, with pre- and post -workshop events at Kiel University (see here).

Australia 21 Scholar Simone Maynard, a Ph.D. candidate at the Australian National University, will be delivering two presentations on Tuesday 8 June – one on the development of an ecosystem services framework for Southeast Queensland, and one based on Australia 21’s paper Towards a National Ecosystem Services Strategy for Australia.

CSIRO Report on megatrends

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) recently published a report highly relevant to Australia’s future, entitled Our Future World: An analysis of global trends, shocks and scenarios.

This report describes the outcomes from a CSIRO global foresight project. It presents five megatrends and eight megashocks (global risks) that will redefine how the world’s people live.

Megatrends

A megatrend is a collection of trends, patterns of economic, social or environmental activity that will change the way people live and the science and technology products they demand.

The five interrelated megatrends identified in the report are:

More from less. This relates to the world’s depleting natural resources and increasing demand for those resources through economic and population growth. Coming decades will see a focus on resource use efficiency. 

A personal touch. Growth of the services sector of western economies is being followed by a second wave of innovation aimed at tailoring and targeting services. 

Divergent demographics. The populations of OECD countries are ageing and experiencing lifestyle and diet related health problems. At the same time there are high fertility rates and problems of not enough food for millions in poor countries.

On the move. People are changing jobs and careers more often, moving house more often, commuting further to work and travelling around the world more often. 

i World. Everything in the natural world will have a digital counterpart. Computing power and memory storage are improving rapidly. Many more devices are getting connected to the internet.

Megashocks

A global risk, or 'megashock', is a significant and sudden event, the timing and magnitude of which are very hard to predict.  The report identified eight megashocks relevant to Australian science:

-  asset price collapse

-  slowing Chinese economy

-  oil and gas price spikes

-  extreme climate change related weather

-  pandemic

-  biodiversity loss

-  terrorism

-  nanotechnology risks.

Report and Feedback

The report may be downloaded from the CSIRO website here.  CSIRO states that it welcomes comment and input from experts and stakeholders in this work in progress. Contact details are given on the project webpage cited above.

ANU to establish $111.7m public policy precinct

On Saturday 8 May the Prime Minister announced that the Commonwealth would commit $111.7 million to enable The Australian National University (ANU) to play a lead role in boosting Australia’s expertise through enhanced teaching and research in public policy.

The key elements of the funding package for a new public policy precinct are

-  An Australian National Institute for Public Policy - established to highlight under one banner the public policy expertise available through ANU and its various specialist centres, including the recently announced Australian Centre on China in the World and the National Security College, and the Australia and New Zealand School of Government (ANZSOG)

-  $14 million to bolster public policy expertise at ANU, through enhancing capacity in The Crawford School of Economics and Government and establishing the H. C. Coombs Policy Forum, which will inform future policy development

-  $7 million to support Sir Roland Wilson Foundation scholarships for public servants to study at ANU

-  $17.3 million for National Security College operations

-  A new $19.8 million building to house jointly the new National Security College and the enhanced presence of ANZSOG in the precinct

-  The recently announced $53.1 million Australian Centre on China in the World (including a building)

-  $0.5m to scope the need and nature of additional accommodation for officials and students in Canberra for courses.

Welcoming the package, ANU Vice-Chancellor Professor Chubb said the ‘precinct’ would be a place where public servants and others working on policy for the nation could engage with leading researchers and educators from a wide range of disciplines.

Ross Buckley on the Greek financial crisis

The whole world could come acropolis

An edited version of this opinion piece by Australia 21 Fellow Ross Buckley appeared in the Sydney Morning Herald, 10 May 2010

The global media has focussed on how Greek profligacy and deception have caused the current financial market troubles. Greece has been spending with abandon, and the Greeks have admitted they manipulated their deficit to gain entry to the Eurozone in 2001, and have since disguised their debt levels using the creative ‘financial engineering’ of Goldman Sachs.

But this is only half the story. 

The seeds of Greece’s, Portugal’s and Spain’s problems were all planted along with the birth of the Euro. Furthermore, their problems have been exacerbated by the access to abundant, cheap credit afforded by the Euro.

From the outset, everyone knew a common currency for economies as disparate as those in Europe was going to be a huge challenge. So all Euro nations made binding commitments to keep their budget deficits below 3% of GDP, and their total debt below 60% of GDP. The idea was that fiscal prudence would carry the day.

The first problem arose in implementing these commitments. Today 14  of the 16 Eurozone countries have debt levels above 60% of their GDP and from 2002 to 2004 even France and Germany breached the deficit rules, a dangerous precedent.

But the bigger problem is the one nobody mentions – the relative competitiveness of economies. Greece introduced the modern drachma in 1954 with a value of 30 to the US dollar. Slowly but steadily the drachma’s value fell, so that by the late 1990s it took 400 drachma to buy a US dollar. This long slow devaluation allowed Greece to remain competitive.

Adopting the Euro ended the long-term trend of southern European currencies slowly devaluing against northern currencies, primarily because the Southern economies were less competitive.   

A report of the European Commission this January estimated the real effective exchange rates for Greece, Spain and Portugal were overvalued by well over 10%. Given devaluation is not an option, wages and prices have to fall by well over 10% for these economies to regain their competitiveness – and that will be an extremely painful process.

In short, if Greece, Portugal and Spain had their own currencies, market forces would mean they were worth much less than the Euro. And the converse applies: if Germany had its own currency, it would be worth much more than the Euro. Germany runs massive trade wurpluses partly because its undervalued currency makes its exports highly competitive. The US rages against China for undervaluing the Renminbi. Yet the Euro is undervalued for Germany, which profits from this precisely as does China. 

So there is some real justice in Germany having to fund the largest share of the Greek bailout. Furthermore, the Euro 110 billion ($157 billion) bailout is essentially of Europe’s banks. It will replace loans currently owed to European banks with loans owed to the IMF and European countries. Germany’s banks are the largest creditors to Greece so Germany will really just be rescuing its banks with its taxpayer funds. None of this helps Greece.

And the really bad news is that the bailout is highly unlikely to work, for it is the wrong medicine.

A bailout is medicine for a liquidity crisis. Yet careful study of the figures suggests Greece’s crisis goes deeper than liquidity, to solvency. The severe austerity measures that accompany the bailout will shrink the economy, reduce the tax base and make servicing Greece’s debt much more difficult. As Greece is highly unlikely to be able to service its debt ongoingly; the bailout is only postponing, and worsening, the inevitable. Credit markets are now anticipating this outcome, as yields of over 18% on two-year Greek government bonds indicate.

What Greece needs is a major devaluation and a debt restructuring involving the cancellation of a sizable proportion of its debt. A devaluation is not possible without breaking apart the Eurozone. A restructuring and partial debt cancellation would require political courage and decisiveness Europe never displays. The only other likely option is default, and the question merely when it occurs.  

Unless Spain and Portugal act with rare alacrity to reduce their wage rates and other costs in absolute terms (which is generally a political and social impossibility) Greece’s problems will probably flow on to Spain and Portugal, and the disaster that currently afflicts a nation which produces only 3% of the Eurozone’s GDP will spread to two countries which together produce 20% of its GDP.

As this contagion spreads, expect global capital markets to seize up, as they did post-Lehman’s collapse. European and American banks are only in business today because governments acted decisively in late 2008 to bail them out with taxpayer funds. But how are sovereign balance sheets to be stretched to fund more bailouts, especially if EU nations now bailout Greece?

Unpalatable as it is, the IMF and Europe now need to attach generous restructuring terms to the bailout, so that creditors write off perhaps one-half of their loans and Greece will be able to service its debts. This will be bitter medicine. However, any other course of action will likely turn Greece’s problems into a global crisis worse than the last one.  

Ross Buckley

Professor of International Finance Law

University of New South Wales