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Monetary Distortions Of GDP In 2021

Monetary Distortions Of GDP In 2021

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Monetary Distortions Of GDP In 2021 Tyler Durden Mon, 10/12/2020 - 18:40

Authored by Alasdair Macleod via GoldMoney.com,

This article explains the effect of monetary inflation on GDP. Nominal GDP is directly inflated by additional money and credit, so GDP growth is simply a reflection of additional money in the economy.

It gives no clue as to the underlying economic situation. Whether the monetary planners know it or not, targeting GDP growth with monetary expansion is a tautology. They only succeed in covering up a deeper recession, the cost of which will become apparent subsequently as the currency’s purchasing power declines. And despite the wealth destruction being wrought by currency debasement, in the coming months we will see monetary expansion deployed more aggressively. An inflationary solution cannot succeed; but future GDP numbers will be artificially increased, encouraging policy makers to claim some success. But we should understand the simple relationship between increased quantities of money and the gains they impart to GDP, which will mislead macroeconomic analysts into thinking the economy is more resilient than it actually is.

Introduction

It is extremely rare to find any commentary on the relationship between monetary expansion and GDP. Yet since last March, when the Fed announced it would unleash unlimited quantities of dollars, it should have become the most important topic for economists and the financial press. Not a peep has been heard.

This extraordinary silence can only be explained by ignorance on the subject, presumably because none of the macroeconomists pouring out of global universities have ever had it set as a subject for research or debate in their dissertations.

The starting point in this voyage of discovery would have to be a taboo subject, Say’s law, which the Great God Keynes dismissed with a wave of his hand in order to invent macroeconomics. Why is it relevant? Because we produce in order to consume. And if we don’t do it, someone else has to produce and pay for us to consume. It is an iron law of the division of labour. In other words, with some limited differences, production is equal to the sum of consumption and deferred consumption (savings).

That is so long as the authorities don’t monkey around with the medium of exchange, the money. A healthy economy is not one that “grows”, but one that does not have its production and consumption interfered with. If the money is sound and its quantity unchanged there would be no change in GDP year after year. As producers, we would continue to anticipate and respond to the demands and desires of the consumer. We are all consumers as well. Those that are disabled from work are subsidised by their families and social groups. Those who become unemployed, always the consequence of misjudgement, have to think again and move on to gainful employment. This is Schumpeter’s creative destruction — a rolling process that is fundamental to satisfying demand where ultimately the consumer is king. It is fundamental to a healthy economy.

While it only happens partially today, it remains the base case when considering all economic topics. In denial of it the state has carved a role for itself, and thanks to Keynes, rewritten the economic rulebook by adding the macro prefix, writing out human activity and replacing it with aggregates and averages. The relationship between money — the temporary storage of our labour to be spent — and economic activity is now undeniably corrupted.

Figure 1 illustrates the relationship between GDP and the money supply by comparing the increase in GDP from its base level in 1980 to end-2019 with the increase in broad money, M2, and by deriving the difference between them. And it can be seen that over the long run the difference between the two, the third line which wobbles about zero, is insignificant.

The reason is simple: “growth” in nominal GDP is only growth in the quantity of money, and has nothing to do with economic progress, which is what free markets deliver. The small variations in GDP less the increase in M2 are wholly due to the fact that GDP does not capture all economic activities, only those that are decreed eligible by the statisticians. If all transactions excluded from GDP were accounted for, variations in the difference would amount to a big fat zero.

Logic tells us this is so, but it escapes the neo-Keynesians — they are not strong on logic. And it leads to a simple but devastating conclusion: adjusted for increases in the money quantity, the US economy today measured by GDP is about the same size as it was in 1980, even allowing for changes in population. It is of course, a very different economy today. Despite the growing interference of government intervention and regulation, we have seen enormous progress in technologies, market trends and in our standards of living — all the product of the private sector despite the burden of non-productive, taxing, inflating, regulating and distorting governments.

It proves you cannot measure economic progress, only the amount of money used in transactions. The relevance to today’s events is that since last March, the quantity of money has been suddenly increased by the Fed, raising the issue posed at the beginning of this article. How will the GDP numbers be affected by massive money-printing? We know from Say’s law, that those of us still exchanging our production for the goods and services we need and want, will continue to do so. But given the destabilisation of covid-19 lockdowns, trade tariffs, and the desire of banks to reduce their over-geared balance sheets, the global economy is in a deep slump. The screenshot below, taken from America’s Bureau of Economic Analysis website shows the position in America.

Before getting into the meat of our subject, it is worth noting that the true deflator of GDP should be the broad measure of money supply, not some fabricated CPI-related figure, as discussed above. Putting that issue to one side, we note that GDP collapsed by an annualised rate of over 31% in the second quarter of 2020, while at the same time M2 increased by 9.4%, an annualised rate of 37.6%. Given that we have shown how over the long run changes in nominal GDP are solely reflective of changes in the quantity of broad money, we can confidently state that the fall in last quarter’s GDP is despite the increase in the quantity of money, showing it does not appear to have been spent by producers and consumers. The question arises as to why.

One answer put forward is that the savings rate has jumped, as illustrated in the chart from the St Louis Fed’s FRED service.

The chart reflects the collapse in spending when people locked down, as well as the $1,200 stimulus checks distributed to households at end-April, which marked the peak in the chart. It is assumed to be money saved, which will be spent when normality returns. Since April, there has been a downward adjustment, partly because some spending has returned. Being derived as the percentage of personal disposable income that is not spent and given the high levels of personal debt throughout the population, much of these so-called savings will have already disappeared into credit card and debt repayments — a credit contraction. It is also likely that with rising unemployment and roughly 80% of the American salaried population living from paycheque to paycheque before the virus, that far from there being a higher savings rate, personal finances have deteriorated so much that money is being withdrawn from savings on a net basis, just to acquire life’s essentials.

If we return to Say’s law for guidance, we will observe that the collapse in GDP is not just of consumption but also of production. We should add it is not the purpose of Say’s law to claim an exact statistical match between consumption and production, because there is always a lag between the increase of money supply and its wider circulation in the economy. But putting that aside, we should adjust the 31.4% annualised fall in the second quarter GDP by the annualised increase in M2 money supply of 36.4%. That tells us that in constant dollar terms the US economy contracted over the second quarter alone by an astonishing 56.4%. Therefore, while timing differences between the deployment of extra fiat money and its full reflection in GDP will deny this figure’s exactitude, the underlying economic situation is far worse than the headline figures show, and the effect of yet higher rates of money supply growth will only serve to further conceal the seriousness of the true position.

We know that monetary planners simply think that extra money should stimulate GDP. For them, the solution is always to increase the quantity of money more aggressively, assuming they can retain control over the price inflation statistics and interest rates. But it is like trying to start a damp fire with the last and equally damp match. Whether monetary planners are aware of it or not, additional money in circulation only adds to the GDP number while destroying the personal wealth upon which an economy thrives.

Applying money debasement to gross output

The scale of the task of rescuing the economy from a deepening slump is far larger than suggested by GDP alone. That which applies to the relationship between changes in the quantity of money and the GDP total also applies to gross output. Gross output includes the intermediate steps of production that make up the final products bought by consumers.

Important caveats are that the increase in M2 is assumed to apply in its entirety to GDP constituents, which is obviously not the case as long as there is spending not included, and that it applies evenly across gross output sectors, which is also not the case. But the adjustment for the increase in M2 money does serve to point out an overall effect, which would otherwise be ignored.

The numbers in the table are not annualised in the manner of the BEA’s assessment of GDP in the earlier screenshot because some of the falls are so extreme that they would show declines approaching or exceeding 100%. But clearly, it can be seen that even including the Federal Government sub-category, 2020 has been a disaster for all sectors of the US economy when the increase in M2 is taken into account.

Federal government spending has nominally increased, but when monetary inflation is allowed for it can never increase by enough to offset the dollar’s debasement. When we assume the future effects of the current debasement on the general level of prices, only then will the purely statistical nature of the recovery in nominal GDP become evident. But that will then raise the question as to whether inflationary monetary policies can continue without a substantial increase in interest rates.

Businesses will now be amending their internal forecasts for the rest of the year, in the light of changed conditions so far, as well as the apparent resurgence of the coronavirus. Given the uncertainties involved they will be protecting themselves by axing costs, including labour. Almost certainly, there will be a second wave of business contraction, provoking a new round of monetary stimulus — already in the wings but delayed over political arguments ahead of the presidential election. Furthermore, the signal to businesses from their bankers is that bank credit is increasingly hard to come by.

In terms of supply chains, the size of which is roughly what gross output reveals, the Fed will seek to inflate $30,215bn of private sector supply chains out of trouble. Given that so far monetary inflation has failed to stop private sector manufacturers’ output sliding by 11.3% in nominal terms in the first half-year, it appears we are only in the early stages of an accelerated burst of money printing.

Fighting the deflationary forces

Not only will the Fed need to support supply chains, but it will have to make up for any contraction of bank credit, so it is not just a matter of filling a monetary gap. Loans to businesses are already contracting as the screenshot below shows.

The $850bn expansion of loans and leases in bank credit commenced in mid-February, shortly after the recession was deemed to have started. At that point, companies were beginning to feel an economic wind-chill, and given their high levels of debt, banks had little alternative to providing extra funding of circulating capital for fear of triggering an avalanche of non-performing loans. The Fed was obviously aware of the gathering danger, cutting its funds rate from one per cent to zero, and on 23 March it issued an emergency FOMC statement promising unlimited monetary inflation.

The bulk of the rise in loans and leases was subsequent to the Fed’s actions in late-March. Presumably, the banks were put under the cosh by the Fed as part of the wider rescue package, and the banks knew they must increase their support for borrowers. Their share of the mostly junk-related collateralised loan market is enough to wipe out the banking sector’s capital on its own. No doubt the support given by the Fed to the corporate bond market through purchases by BlackRock is designed to ease bankers’ fears. But by mid-May a decline in commercial lending has set in as banks gradually began to protect their balance sheets.

Consumers are being squeezed as well. In the UK, banks have raised interest rates on arranged overdrafts to usurious levels of 40%, and where they can they have reduced credit card limits. Is something similar happening in the US? The answer appears to be yes, as the next chart from FRED shows.

While busily funding struggling businesses, the banks were cutting loans to consumers. While the scale of it is different, the reduction in consumer loans makes it harder for businesses, particularly retailers, to survive.

Funding the deficit

Having embarked on a supply-side stimulus, the Federal Government entered the pandemic with a trillion-dollar budget deficit, which on CBO estimates in the last fiscal year turned out at $3.3 trillion. In the months from March to end-September it had been running at an annualised rate of $4.6 trillion. The new fiscal year, which commenced at the beginning of October, is likely to be at least as bad. The hope had been for a rapid V-shaped recovery, but that can now be ruled out, and as noted above, businesses have not finished cutting their costs.

Government spending is included in both GDP and gross output, so cuts in government spending are a headwind to the maintenance of GDP fallacies. For this reason, any cuts in government spending will be seen as counterproductive by the US Treasury. Government spending will therefore be likely increased significantly further as part of a package to keep pumping increasing quantities of money into the economy.

Increases in the general level of taxation can also be ruled out. While statistically they can be seen to be transfers within the overall economy, it makes no sense to government economists to stimulate production and consumption by adding money to private sector GDP and then taxing it away. Instead, they will almost certainly convince themselves that earlier supply-side policies must be adhered to and accelerated. And as we have seen, consumers have had money helicoptered into their bank accounts with more drops to follow.

Other fixes

Other ways to increase GDP than by monetary inflation include broadening its scope. If they are not included already, activities such as prostitution, gambling, drug-trafficking and alcohol and tobacco smuggling can be added and estimated, and therefore enhanced to bolster GDP. In the UK, the Office for National Statistics estimated in 2014 that these categories included with other amendments to GDP constituents would add between four and five per cent to GDP at 2009 prices.

A further addition to GDP would come from the abandonment of the cash economy, a process well underway and accelerated by the coronavirus. Watch out for government medical propaganda about how long the virus survives on banknotes and coins.

Summary and conclusion

The corruption of GDP numbers through accelerated monetary inflation is underappreciated and needs to be understood. When today’s inevitable and continuing debasement of the fiat currency is taken into account the economic destruction that has resulted is not only far greater than the headline figures for GDP suggest, but a continuation of inflationary policies only serves to bolster the statistic while the underlying economic condition worsens considerably.

This will not stop policy planners from pursuing inflationism. They may not realise it, but with such a dramatic contraction in their economies so far this year, the task of making nominal GDP appear to be robust by issuing limitless currency is a policy that cannot ultimately succeed. A second wave of the coronavirus is putting paid to hopes of a rapid economic recovery, which means that businesses have to face the reality of being overextended in a contracting business environment while their input prices rise due to monetary debasement.

The Fed has effectively committed itself to supporting all economic and financial activities with newly issued money. These include financing record budget deficits, underwriting supply chains, replacing contracting bank credit and supporting insolvent banks. Furthermore, it must ensure financial markets, particularly for government debt, remain strong, so that the interest cost of the US Treasury’s debt is contained close to the zero bound.

And finally, the Fed’s only real tool is the expansion of M1 money supply, which currently stands at $5.577 trillion. How many multiples of this figure will be required? Five, ten times, or even more?

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Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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3 hours ago

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March 10, 2024

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act. 

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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‘I couldn’t stand the pain’: the Turkish holiday resort that’s become an emergency dental centre for Britons who can’t get treated at home

The crisis in NHS dentistry is driving increasing numbers abroad for treatment. Here are some of their stories.

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6 hours ago

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March 10, 2024

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This clinic in the Turkish resort of Antalya is the official 'dental sponsor' of the Miss England competition. Diana Ibanez-Tirado, Author provided

It’s a hot summer day in the Turkish city of Antalya, a Mediterranean resort with golden beaches, deep blue sea and vibrant nightlife. The pool area of the all-inclusive resort is crammed with British people on sun loungers – but they aren’t here for a holiday. This hotel is linked to a dental clinic that organises treatment packages, and most of these guests are here to see a dentist.

From Norwich, two women talk about gums and injections. A man from Wales holds a tissue close to his mouth and spits blood – he has just had two molars extracted.

The dental clinic organises everything for these dental “tourists” throughout their treatment, which typically lasts from three to 15 days. The stories I hear of what has caused them to travel to Turkey are strikingly similar: all have struggled to secure dental treatment at home on the NHS.

“The hotel is nice and some days I go to the beach,” says Susan*, a hairdresser in her mid-30s from Norwich. “But really, we aren’t tourists like in a proper holiday. We come here because we have no choice. I couldn’t stand the pain.”

Seaside beach resort with mountains in the distance
The Turkish Mediterranean resort of Antalya. Akimov Konstantin/Shutterstock

This is Susan’s second visit to Antalya. She explains that her ordeal started two years earlier:

I went to an NHS dentist who told me I had gum disease … She did some cleaning to my teeth and gums but it got worse. When I ate, my teeth were moving … the gums were bleeding and it was very painful. I called to say I was in pain but the clinic was not accepting NHS patients any more.

The only option the dentist offered Susan was to register as a private patient:

I asked how much. They said £50 for x-rays and then if the gum disease got worse, £300 or so for extraction. Four of them were moving – imagine: £1,200 for losing your teeth! Without teeth I’d lose my clients, but I didn’t have the money. I’m a single mum. I called my mum and cried.

Susan’s mother told her about a friend of hers who had been to Turkey for treatment, then together they found a suitable clinic:

The prices are so much cheaper! Tooth extraction, x-rays, consultations – it all comes included. The flight and hotel for seven days cost the same as losing four teeth in Norwich … I had my lower teeth removed here six months ago, now I’ve got implants … £2,800 for everything – hotel, transfer, treatments. I only paid the flights separately.

In the UK, roughly half the adult population suffers from periodontitis – inflammation of the gums caused by plaque bacteria that can lead to irreversible loss of gums, teeth, and bone. Regular reviews by a dentist or hygienist are required to manage this condition. But nine out of ten dental practices cannot offer NHS appointments to new adult patients, while eight in ten are not accepting new child patients.

Some UK dentists argue that Britons who travel abroad for treatment do so mainly for cosmetic procedures. They warn that dental tourism is dangerous, and that if their treatment goes wrong, dentists in the UK will be unable to help because they don’t want to be responsible for further damage. Susan shrugs this off:

Dentists in England say: ‘If you go to Turkey, we won’t touch you [afterwards].’ But I don’t worry because there are no appointments at home anyway. They couldn’t help in the first place, and this is why we are in Turkey.

‘How can we pay all this money?’

As a social anthropologist, I travelled to Turkey a number of times in 2023 to investigate the crisis of NHS dentistry, and the journeys abroad that UK patients are increasingly making as a result. I have relatives in Istanbul and have been researching migration and trading patterns in Turkey’s largest city since 2016.

In August 2023, I visited the resort in Antalya, nearly 400 miles south of Istanbul. As well as Susan, I met a group from a village in Wales who said there was no provision of NHS dentistry back home. They had organised a two-week trip to Turkey: the 12-strong group included a middle-aged couple with two sons in their early 20s, and two couples who were pensioners. By going together, Anya tells me, they could support each other through their different treatments:

I’ve had many cavities since I was little … Before, you could see a dentist regularly – you didn’t even think about it. If you had pain or wanted a regular visit, you phoned and you went … That was in the 1990s, when I went to the dentist maybe every year.

Anya says that once she had children, her family and work commitments meant she had no time to go to the dentist. Then, years later, she started having serious toothache:

Every time I chewed something, it hurt. I ate soups and soft food, and I also lost weight … Even drinking was painful – tea: pain, cold water: pain. I was taking paracetamol all the time! I went to the dentist to fix all this, but there were no appointments.

Anya was told she would have to wait months, or find a dentist elsewhere:

A private clinic gave me a list of things I needed done. Oh my God, almost £6,000. My husband went too – same story. How can we pay all this money? So we decided to come to Turkey. Some people we know had been here, and others in the village wanted to come too. We’ve brought our sons too – they also need to be checked and fixed. Our whole family could be fixed for less than £6,000.

By the time they travelled, Anya’s dental problems had turned into a dental emergency. She says she could not live with the pain anymore, and was relying on paracetamol.

In 2023, about 6 million adults in the UK experienced protracted pain (lasting more than two weeks) caused by toothache. Unintentional paracetamol overdose due to dental pain is a significant cause of admissions to acute medical units. If left untreated, tooth infections can spread to other parts of the body and cause life-threatening complications – and on rare occasions, death.

In February 2024, police were called to manage hundreds of people queuing outside a newly opened dental clinic in Bristol, all hoping to be registered or seen by an NHS dentist. One in ten Britons have admitted to performing “DIY dentistry”, of which 20% did so because they could not find a timely appointment. This includes people pulling out their teeth with pliers and using superglue to repair their teeth.

In the 1990s, dentistry was almost entirely provided through NHS services, with only around 500 solely private dentists registered. Today, NHS dentist numbers in England are at their lowest level in a decade, with 23,577 dentists registered to perform NHS work in 2022-23, down 695 on the previous year. Furthermore, the precise division of NHS and private work that each dentist provides is not measured.

The COVID pandemic created longer waiting lists for NHS treatment in an already stretched public service. In Bridlington, Yorkshire, people are now reportedly having to wait eight-to-nine years to get an NHS dental appointment with the only remaining NHS dentist in the town.

In his book Patients of the State (2012), Argentine sociologist Javier Auyero describes the “indignities of waiting”. It is the poor who are mostly forced to wait, he writes. Queues for state benefits and public services constitute a tangible form of power over the marginalised. There is an ethnic dimension to this story, too. Data suggests that in the UK, patients less likely to be effective in booking an NHS dental appointment are non-white ethnic groups and Gypsy or Irish travellers, and that it is particularly challenging for refugees and asylum-seekers to access dental care.

This article is part of Conversation Insights
The Insights team generates long-form journalism derived from interdisciplinary research. The team is working with academics from different backgrounds who have been engaged in projects aimed at tackling societal and scientific challenges.

In 2022, I experienced my own dental emergency. An infected tooth was causing me debilitating pain, and needed root canal treatment. I was advised this would cost £71 on the NHS, plus £307 for a follow-up crown – but that I would have to wait months for an appointment. The pain became excruciating – I could not sleep, let alone wait for months. In the same clinic, privately, I was quoted £1,300 for the treatment (more than half my monthly income at the time), or £295 for a tooth extraction.

I did not want to lose my tooth because of lack of money. So I bought a flight to Istanbul immediately for the price of the extraction in the UK, and my tooth was treated with root canal therapy by a private dentist there for £80. Including the costs of travelling, the total was a third of what I was quoted to be treated privately in the UK. Two years on, my treated tooth hasn’t given me any more problems.

A better quality of life

Not everyone is in Antalya for emergency procedures. The pensioners from Wales had contacted numerous clinics they found on the internet, comparing prices, treatments and hotel packages at least a year in advance, in a carefully planned trip to get dental implants – artificial replacements for tooth roots that help support dentures, crowns and bridges.

Street view of a dental clinic in Antalya, Turkey
Dental clinic in Antalya, Turkey. Diana Ibanez-Tirado, CC BY-NC-ND

In Turkey, all the dentists I speak to (most of whom cater mainly for foreigners, including UK nationals) consider implants not a cosmetic or luxurious treatment, but a development in dentistry that gives patients who are able to have the procedure a much better quality of life. This procedure is not available on the NHS for most of the UK population, and the patients I meet in Turkey could not afford implants in private clinics back home.

Paul is in Antalya to replace his dentures, which have become uncomfortable and irritating to his gums, with implants. He says he couldn’t find an appointment to see an NHS dentist. His wife Sonia went through a similar procedure the year before and is very satisfied with the results, telling me: “Why have dentures that you need to put in a glass overnight, in the old style? If you can have implants, I say, you’re better off having them.”

Most of the dental tourists I meet in Antalya are white British: this city, known as the Turkish Riviera, has developed an entire economy catering to English-speaking tourists. In 2023, more than 1.3 million people visited the city from the UK, up almost 15% on the previous year.

Read more: NHS dentistry is in crisis – are overseas dentists the answer?

In contrast, the Britons I meet in Istanbul are predominantly from a non-white ethnic background. Omar, a pensioner of Pakistani origin in his early 70s, has come here after waiting “half a year” for an NHS appointment to fix the dental bridge that is causing him pain. Omar’s son had been previously for a hair transplant, and was offered a free dental checkup by the same clinic, so he suggested it to his father. Having worked as a driver for a manufacturing company for two decades in Birmingham, Omar says he feels disappointed to have contributed to the British economy for so long, only to be “let down” by the NHS:

At home, I must wait and wait and wait to get a bridge – and then I had many problems with it. I couldn’t eat because the bridge was uncomfortable and I was in pain, but there were no appointments on the NHS. I asked a private dentist and they recommended implants, but they are far too expensive [in the UK]. I started losing weight, which is not a bad thing at the beginning, but then I was worrying because I couldn’t chew and eat well and was losing more weight … Here in Istanbul, I got dental implants – US$500 each, problem solved! In England, each implant is maybe £2,000 or £3,000.

In the waiting area of another clinic in Istanbul, I meet Mariam, a British woman of Iraqi background in her late 40s, who is making her second visit to the dentist here. Initially, she needed root canal therapy after experiencing severe pain for weeks. Having been quoted £1,200 in a private clinic in outer London, Mariam decided to fly to Istanbul instead, where she was quoted £150 by a dentist she knew through her large family. Even considering the cost of the flight, Mariam says the decision was obvious:

Dentists in England are so expensive and NHS appointments so difficult to find. It’s awful there, isn’t it? Dentists there blamed me for my rotten teeth. They say it’s my fault: I don’t clean or I ate sugar, or this or that. I grew up in a village in Iraq and didn’t go to the dentist – we were very poor. Then we left because of war, so we didn’t go to a dentist … When I arrived in London more than 20 years ago, I didn’t speak English, so I still didn’t go to the dentist … I think when you move from one place to another, you don’t go to the dentist unless you are in real, real pain.

In Istanbul, Mariam has opted not only for the urgent root canal treatment but also a longer and more complex treatment suggested by her consultant, who she says is a renowned doctor from Syria. This will include several extractions and implants of back and front teeth, and when I ask what she thinks of achieving a “Hollywood smile”, Mariam says:

Who doesn’t want a nice smile? I didn’t come here to be a model. I came because I was in pain, but I know this doctor is the best for implants, and my front teeth were rotten anyway.

Dentists in the UK warn about the risks of “overtreatment” abroad, but Mariam appears confident that this is her opportunity to solve all her oral health problems. Two of her sisters have already been through a similar treatment, so they all trust this doctor.

Alt text
An Istanbul clinic founded by Afghan dentists has a message for its UK customers. Diana Ibanez-Tirado, CC BY-NC-ND

The UK’s ‘dental deserts’

To get a fuller understanding of the NHS dental crisis, I’ve also conducted 20 interviews in the UK with people who have travelled or were considering travelling abroad for dental treatment.

Joan, a 50-year-old woman from Exeter, tells me she considered going to Turkey and could have afforded it, but that her back and knee problems meant she could not brave the trip. She has lost all her lower front teeth due to gum disease and, when I meet her, has been waiting 13 months for an NHS dental appointment. Joan tells me she is living in “shame”, unable to smile.

In the UK, areas with extremely limited provision of NHS dental services – known as as “dental deserts” – include densely populated urban areas such as Portsmouth and Greater Manchester, as well as many rural and coastal areas.

In Felixstowe, the last dentist taking NHS patients went private in 2023, despite the efforts of the activist group Toothless in Suffolk to secure better access to NHS dentists in the area. It’s a similar story in Ripon, Yorkshire, and in Dumfries & Galloway, Scotland, where nearly 25,000 patients have been de-registered from NHS dentists since 2021.

Data shows that 2 million adults must travel at least 40 miles within the UK to access dental care. Branding travel for dental care as “tourism” carries the risk of disguising the elements of duress under which patients move to restore their oral health – nationally and internationally. It also hides the immobility of those who cannot undertake such journeys.

The 90-year-old woman in Dumfries & Galloway who now faces travelling for hours by bus to see an NHS dentist can hardly be considered “tourism” – nor the Ukrainian war refugees who travelled back from West Sussex and Norwich to Ukraine, rather than face the long wait to see an NHS dentist.

Many people I have spoken to cannot afford the cost of transport to attend dental appointments two hours away – or they have care responsibilities that make it impossible. Instead, they are forced to wait in pain, in the hope of one day securing an appointment closer to home.

Billboard advertising a dental clinic in Turkey
Dental clinics have mushroomed in recent years in Turkey, thanks to the influx of foreign patients seeking a wide range of treatments. Diana Ibanez-Tirado, CC BY-NC-ND

‘Your crisis is our business’

The indignities of waiting in the UK are having a big impact on the lives of some local and foreign dentists in Turkey. Some neighbourhoods are rapidly changing as dental and other health clinics, usually in luxurious multi-storey glass buildings, mushroom. In the office of one large Istanbul medical complex with sections for hair transplants and dentistry (plus one linked to a hospital for more extensive cosmetic surgery), its Turkish owner and main investor tells me:

Your crisis is our business, but this is a bazaar. There are good clinics and bad clinics, and unfortunately sometimes foreign patients do not know which one to choose. But for us, the business is very good.

This clinic only caters to foreign patients. The owner, an architect by profession who also developed medical clinics in Brazil, describes how COVID had a major impact on his business:

When in Europe you had COVID lockdowns, Turkey allowed foreigners to come. Many people came for ‘medical tourism’ – we had many patients for cosmetic surgery and hair transplants. And that was when the dental business started, because our patients couldn’t see a dentist in Germany or England. Then more and more patients started to come for dental treatments, especially from the UK and Ireland. For them, it’s very, very cheap here.

The reasons include the value of the Turkish lira relative to the British pound, the low cost of labour, the increasing competition among Turkish clinics, and the sheer motivation of dentists here. While most dentists catering to foreign patients are from Turkey, others have arrived seeking refuge from war and violence in Syria, Iraq, Afghanistan, Iran and beyond. They work diligently to rebuild their lives, careers and lost wealth.

Regardless of their origin, all dentists in Turkey must be registered and certified. Hamed, a Syrian dentist and co-owner of a new clinic in Istanbul catering to European and North American patients, tells me:

I know that you say ‘Syrian’ and people think ‘migrant’, ‘refugee’, and maybe think ‘how can this dentist be good?’ – but Syria, before the war, had very good doctors and dentists. Many of us came to Turkey and now I have a Turkish passport. I had to pass the exams to practise dentistry here – I study hard. The exams are in Turkish and they are difficult, so you cannot say that Syrian doctors are stupid.

Hamed talks excitedly about the latest technology that is coming to his profession: “There are always new materials and techniques, and we cannot stop learning.” He is about to travel to Paris to an international conference:

I can say my techniques are very advanced … I bet I put more implants and do more bone grafting and surgeries every week than any dentist you know in England. A good dentist is about practice and hand skills and experience. I work hard, very hard, because more and more patients are arriving to my clinic, because in England they don’t find dentists.

Dental equipment in a Turkish treatment room
Dentists in Turkey boast of using the latest technology. Diana Ibanez-Tirado, CC BY-NC-ND

While there is no official data about the number of people travelling from the UK to Turkey for dental treatment, investors and dentists I speak to consider that numbers are rocketing. From all over the world, Turkey received 1.2 million visitors for “medical tourism” in 2022, an increase of 308% on the previous year. Of these, about 250,000 patients went for dentistry. One of the most renowned dental clinics in Istanbul had only 15 British patients in 2019, but that number increased to 2,200 in 2023 and is expected to reach 5,500 in 2024.

Like all forms of medical care, dental treatments carry risks. Most clinics in Turkey offer a ten-year guarantee for treatments and a printed clinical history of procedures carried out, so patients can show this to their local dentists and continue their regular annual care in the UK. Dental treatments, checkups and maintaining a good oral health is a life-time process, not a one-off event.

Many UK patients, however, are caught between a rock and a hard place – criticised for going abroad, yet unable to get affordable dental care in the UK before and after their return. The British Dental Association has called for more action to inform these patients about the risks of getting treated overseas – and has warned UK dentists about the legal implications of treating these patients on their return. But this does not address the difficulties faced by British patients who are being forced to go abroad in search of affordable, often urgent dental care.

A global emergency

The World Health Organization states that the explosion of oral disease around the world is a result of the “negligent attitude” that governments, policymakers and insurance companies have towards including oral healthcare under the umbrella of universal healthcare. It as if the health of our teeth and mouth is optional; somehow less important than treatment to the rest of our body. Yet complications from untreated tooth decay can lead to hospitalisation.

The main causes of oral health diseases are untreated tooth decay, severe gum disease, toothlessness, and cancers of the lip and oral cavity. Cases grew during the pandemic, when little or no attention was paid to oral health. Meanwhile, the global cosmetic dentistry market is predicted to continue growing at an annual rate of 13% for the rest of this decade, confirming the strong relationship between socioeconomic status and access to oral healthcare.

In the UK since 2018, there have been more than 218,000 admissions to hospital for rotting teeth, of which more than 100,000 were children. Some 40% of children in the UK have not seen a dentist in the past 12 months. The role of dentists in prevention of tooth decay and its complications, and in the early detection of mouth cancer, is vital. While there is a 90% survival rate for mouth cancer if spotted early, the lack of access to dental appointments is causing cases to go undetected.

The reasons for the crisis in NHS dentistry are complex, but include: the real-term cuts in funding to NHS dentistry; the challenges of recruitment and retention of dentists in rural and coastal areas; pay inequalities facing dental nurses, most of them women, who are being badly hit by the cost of living crisis; and, in England, the 2006 Dental Contract that does not remunerate dentists in a way that encourages them to continue seeing NHS patients.

The UK is suffering a mass exodus of the public dentistry workforce, with workers leaving the profession entirely or shifting to the private sector, where payments and life-work balance are better, bureaucracy is reduced, and prospects for career development look much better. A survey of general dental practitioners found that around half have reduced their NHS work since the pandemic – with 43% saying they were likely to go fully private, and 42% considering a career change or taking early retirement.

Reversing the UK’s dental crisis requires more commitment to substantial reform and funding than the “recovery plan” announced by Victoria Atkins, the secretary of state for health and social care, on February 7.

The stories I have gathered show that people travelling abroad for dental treatment don’t see themselves as “tourists” or vanity-driven consumers of the “Hollywood smile”. Rather, they have been forced by the crisis in NHS dentistry to seek out a service 1,500 miles away in Turkey that should be a basic, affordable right for all, on their own doorstep.

*Names in this article have been changed to protect the anonymity of the interviewees.

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Diana Ibanez Tirado receives funding from the School of Global Studies, University of Sussex.

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International

Beloved mall retailer files Chapter 7 bankruptcy, will liquidate

The struggling chain has given up the fight and will close hundreds of stores around the world.

Published

10 hours ago

on

March 10, 2024

By

It has been a brutal period for several popular retailers. The fallout from the covid pandemic and a challenging economic environment have pushed numerous chains into bankruptcy with Tuesday Morning, Christmas Tree Shops, and Bed Bath & Beyond all moving from Chapter 11 to Chapter 7 bankruptcy liquidation.

In all three of those cases, the companies faced clear financial pressures that led to inventory problems and vendors demanding faster, or even upfront payment. That creates a sort of inevitability.

Related: Beloved retailer finds life after bankruptcy, new famous owner

When a retailer faces financial pressure it sets off a cycle where vendors become wary of selling them items. That leads to barren shelves and no ability for the chain to sell its way out of its financial problems. 

Once that happens bankruptcy generally becomes the only option. Sometimes that means a Chapter 11 filing which gives the company a chance to negotiate with its creditors. In some cases, deals can be worked out where vendors extend longer terms or even forgive some debts, and banks offer an extension of loan terms.

In other cases, new funding can be secured which assuages vendor concerns or the company might be taken over by its vendors. Sometimes, as was the case with David's Bridal, a new owner steps in, adds new money, and makes deals with creditors in order to give the company a new lease on life.

It's rare that a retailer moves directly into Chapter 7 bankruptcy and decides to liquidate without trying to find a new source of funding.

Mall traffic has varied depending upon the type of mall.

Image source: Getty Images

The Body Shop has bad news for customers  

The Body Shop has been in a very public fight for survival. Fears began when the company closed half of its locations in the United Kingdom. That was followed by a bankruptcy-style filing in Canada and an abrupt closure of its U.S. stores on March 4.

"The Canadian subsidiary of the global beauty and cosmetics brand announced it has started restructuring proceedings by filing a Notice of Intention (NOI) to Make a Proposal pursuant to the Bankruptcy and Insolvency Act (Canada). In the same release, the company said that, as of March 1, 2024, The Body Shop US Limited has ceased operations," Chain Store Age reported.

A message on the company's U.S. website shared a simple message that does not appear to be the entire story.

"We're currently undergoing planned maintenance, but don't worry we're due to be back online soon."

That same message is still on the company's website, but a new filing makes it clear that the site is not down for maintenance, it's down for good.

The Body Shop files for Chapter 7 bankruptcy

While the future appeared bleak for The Body Shop, fans of the brand held out hope that a savior would step in. That's not going to be the case. 

The Body Shop filed for Chapter 7 bankruptcy in the United States.

"The US arm of the ethical cosmetics group has ceased trading at its 50 outlets. On Saturday (March 9), it filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk including those in a distribution center that still holds millions of dollars worth of stock," The Guardian reported.

After its closure in the United States, the survival of the brand remains very much in doubt. About half of the chain's stores in the United Kingdom remain open along with its Australian stores. 

The future of those stores remains very much in doubt and the chain has shared that it needs new funding in order for them to continue operating.

The Body Shop did not respond to a request for comment from TheStreet.   

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