Rejoinder to the Financial Times: Welfare cuts cannot only fall on the working poor:

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The Editor

Financial Times
1 Southwark Bridge

London
SE1 9HL

Dear Sir,

Welfare cuts cannot only fall on the working poor: A Rejoinder

I have read with interest your editorial titled, “Welfare cuts cannot only fall on the working poor”, which was published in the 21 March 2016 edition of the Financial Times. The editorial which was written in response to Iain Duncan Smith’s resignation as Welfare and Pension Secretary suggests that the government’s welfare reform should shift focus from the working poor to the elderly with higher pensions. You note that, “The relentless protection of pensioner rights at the expense of the working poor has had its day.” Sir, I believe that the FT’s uncharacteristic support of the working poor is a little too late and this editorial ignores the bigger picture of addressing the other side of the austerity coin i.e. tax reform.

The right-wing Conservative Government came into power at a time when Britain was experiencing its worst recession since the 1930’s. Unemployment was high and the government’s fiscal position was in a deplorable state. The government embarked on an austerity programme to resolve the crisis. However, through a strange formula, the consequences of the austerity programme was placed upon the bent and broken backs of the most vulnerable segment of British society comprising of the poor, the disabled, students, the unemployed and the homeless. George Osborne and Iain Duncan Smith in the words of Maurice Mcleod robbed disabled Peter to pay for privileged Paul thereby leaving many of God’s children bloodied on the Jericho road of life. As a consequence of the welfare cuts, almost 10,000 disabled people have died; the number of food bank usage has increased from 41,000 to 1 million; an estimated one million children could be pushed into poverty by 2020 and nearly 100,000 households are facing homelessness.

With all due respect Sir, the FT cannot absorb itself from its complicity in Mr. Cameron’s crusade against the last, the least and the littlest. It might be convenient to side with the working poor now that Iain Duncan Smith has called out the government for its obsession of reducing the deficit to the detriment of the poor. However, the FT needs to realise that some of us have long memories and some of us have not forgotten the role the paper has played in not only supporting, but also providing the ideological foundation for the government’s jihad against the poor.

Any student of Economics knows that austerity measures comprise of spending cuts, tax increases or a combination of both. However, the FT has adopted an asymmetric approach in its analysis of the austerity programme by applauding the right-wing British government’s spending cuts which have negatively impacted the poor, while frowning at tax reform proposals that impact corporations and the rich. For instance, when former Liberal Democrat leader Nick Clegg proposed an emergency wealth tax on the rich, the FT in an editorial titled, “Wealth taxes and the politics of envy” argued that this tax would, “Simply deal another, perhaps mortal, blow to growth.” Likewise, when Ed Balls, the former Shadow Chancellor proposed restoring the top tax rate of 50%, the FT in an editorial titled, ‘Labour’s growing gulf with business’, argued that the proposed tax rise was a poor recipe for Britain.

I find it paradoxical for the FT to champion the cause of the poor in this editorial, when in another editorial titled, “Bringing benefits under control” it supported Mr. Smith’s reform of the Disability Living Allowance saying, “While this move may be politically risky, the decision by Iain Duncan Smith, the work and pensions secretary deserves support.” In the editorial, ‘The retreat of the welfare state’, the FT supported the asphyxiation of the working poor arguing that the “UK must continue benefits squeeze in the (2013) spending review.” When Ed Miliband proposed regulating zero hour contract work, the FT came to the defence of employers of zero hour contractors. In an editorial titled, “Ed Miliband’s Flawed Swipe At Zero-Hours Contracts”, the FT suggested that Miliband was, “taking up arms for cleaners and shop staff unsure of their next pay packet;” and that there was, “nothing inherently unfair about a zero-hours contract.” In contrast, when the European Parliament proposed a cap on bonuses, the FT in an editorial, “Bonus cap is a bad omen for Britain” called the cap a defeat for common sense and described the idea as a mixture of populism and ignorance. Could it be that according to the Gospel of FT, when policies negatively impact the working poor, it is fair play, but it is unfair play when such policies negatively impact the 1%? Or is the Financial Times acting as the High Priest of capitalism by appeasing the god of mammon through the burnt offering of the poor?

Admittedly, there is nothing I can do to make the FT change its faith in the sacredness of the free market, however, permit me to use the next couple of lines to explain why the ideology underpinning the FT and the right-wing British government’s reasoning needs rethinking. You write, “Welfare spending will still have to come down,” but you don’t make any suggestion for increase in tax for the rich and corporations. For too long, welfare cuts have been the main focus of the government and the right-wing media. Isn’t it time to shift the burden elsewhere? Who caused the financial crisis in the first place? It wasn’t the homeless man on the street; it wasn’t the pensioner in the care home; it wasn’t the disabled woman in the hospital; it wasn’t the university student at school. It wasn’t the zero hour contractor in the factory. If the government is serious about reducing the deficit, it should extend its gaze to reforming the tax loopholes after all, if corporations and individuals pay the appropriate tax, it could help reduce the deficit. Instead of acting as cheerleader for Mr. Cameron’s one-sided austerity implementation, the FT should start asking some tough questions such as: Why is there one rule for the 99% and another rule for the 1%? Why should spending cuts against the poor be a good recipe for Britain and tax increase for the rich be a bad recipe for Britain? Why should Google be paying £11.6m to the Treasury, despite generating £3.4bn of business in the UK? Why should Facebook be paying £4,327 in corporation tax despite paying £35m in staff bonuses? Why should carried interest be taxed at a much lower rate than personal income? How can the government close the UK tax gap of £119 billion? If tax evasion is illegal, why shouldn’t tax avoidance likewise be illegal?

We live in a world where we humanise ‘Mr. Market’ but relegate the poor to costs, liabilities and cash outflows. We live in a world where job cuts are good for Mr. Market; where welfare cuts are good for Mr. Market and where low wages are good for Mr. Market. Economics and morality need not be mutually exclusive concepts. Economics without morality is vicious, bloodthirsty and eventually results in disaster. Any society that is able to reduce its budget deficit yet suffers from an empathy deficit is spiritually dead and on its way to hell fire.

I conclude by rephrasing the concluding paragraph of your editorial: The relentless protection of the rights of the 1% at the expense of the 99% has had its day. Tax expenditure for the 1% will still have to go up. But after the debacle over the Budget, a new and fairer balance between Britain’s classes must be found.

Selah.

Ahmed Olayinka Sule, CFA

23 March 2016

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Writer and social critic

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