Friday, November 23, 2012

Lord Freud: Risks, Corpses and Slums

In November 2012 the Tory Minister for Welfare Reform David Anthony Freud hit the headlines with a number of outrageous statements about welfare and welfare recipients. I'll go through some of the stuff that attracted criticism and then highlight some other equally bad comments that passed by without so much as a whisper of criticism in the mainstream media.

Firstly I'll give a brief biography of this "Lord Freud", or to give him his proper name, David Anthony Freud. David Anthony, the great-grandson of Sigmund Freud, was born in 1950, had an elite private school education. He then studied Politics Philosophy and Economics (PPE) at Oxford (people with PPE qualifications at Oxford, Cambridge or LSE are the most spectacularly over-represented group amongst the political classes). After working as a journalist and as an investment banker he eventually found his way into the political classes at the invitation of Tony Blair, who charged him with reviewing the Welfare to Work scheme. The recommendations he came up with were a massive increase in private sector involvement in the welfare system and schemes to incentivise/force disabled people back into the workplace. The reforms were adopted, but when Gordon Brown became Prime Minister, some of the reforms were dropped and others were deliberately slowed down.

In 2009 David Anthony Freud joined the Conservative party and was immediately handed a seat in the unelected House of Lords. After the Tories came to power (with the backing of the Lib-Dems) Freud was appointed as a Parliamentary Under Secretary of State for Work and Pensions, with the title of Minister for Welfare Reform. He has been the man responsible for pushing the Tory policy of combining numerous benefits payments into a single Universal Credit which is due to be rolled out in 2013. He describes this reform as "This is a huge, huge change. It’s the biggest change in our welfare system that it has ever seen. I’m not sure you could find very many other examples around the rest of the world".

Critics of the scheme, including a Parliamentary select committee have expressed grave concerns about "whether there will be sufficient time for the Government to learn from its pilots and whether it is desirable or necessary to implement so many changes at once" and stated that they also have "serious concerns about how more vulnerable people will cope with the changes". For more analysis on the specific findings of the Parliamentary Select Committee you can check out Mike Sivier's excellent blog post here.


Here are Freud's comments in House Magazine (like a Parliamentary "sixth form magazine") that attracted so much criticism across the social mediascape and from elements of the mainstream press too.
"It's a very basic statement around fairness, the welfare system is not there as a lifestyle choice" 
This kind of statement is absolutely indicative of the Tory mentality. That benefits claimants can be treated as a vast homogeneous cohort and demonised as scroungers. It is a great (if completely immoral) tactic because this kind of simplistic narrative plays into one of the strongest emotional responses, that of unfairness. The fact that this is the thinking behind Freud's claims about the benefits lifestyle is illustrated by the fact that he prefaced it with an invocation of "fairness".

The problem is that this kind of demonisation is completely inaccurate nonsense. The reason that there are so many long-term unemployed is not that the unemployed are determined to laze around enjoying "a lifestyle" at the taxpayers' expense, it is because there are significantly fewer jobs than available workers.

People are not unemployed because they love the unemployed lifestyle as Freud is implying, they are unemployed because there are simply not enough jobs to go around. This jobs shortfall isn't a sad incidental fact either, it is a fundamental element of neoliberal economic theory. Neoliberals believe that one of the most effective ways of driving down wages and labour rights is through maintaining a standing army of unemployed. The best way to confront unemployment is to confront the policy promoted by successive orthodox neoliberal governments that high unemployment is necessary, once the economy returns to near full employment, then by all means start whining about the small minority of unemployed that continue to refuse to work, but whilst there are not enough jobs to go around, this kind of whining is actually "scapegoating" and transferring the blame from the private sector and the political classes that deliberately maintain high unemployment in order to drive down wages, to the people that actually suffer the consequences of these policies; a perfect example of the "blame the victim" fallacy.


"People who are poorer should be prepared to take the biggest risks; they’ve got least to lose" 

This statement is a clear demonstration of the kind of economic illiteracy that can be expected from an investment banker turned Tory welfare reformer. The key word here is risk. Freud doesn't mean risk in the everyday sense, although one often gets the impression that Tories believe that the nation would be better off if the disabled and unemployed did take "the biggest risks", like perhaps, walking (or wheeling their wheelchairs) blindfolded across a busy motorway. What Freud actually means when he claims that the unemployed should take the biggest risks, is that they should gamble economically. There are two things that are fundamentally wrong with this idea.

Firstly, in order to take speculative economic risk, you must first have capital. Without capital to invest in speculative ventures, you have nothing to offer but your labour, thus you are ripe for exploitation. The idea that the poorest should take more risk because they have the least to lose is completely mitigated by the fact that in capital (and often in terms of labour skills) they have the least to stake too, meaning that therefore they have the least to gain.

Secondly, the idea that people should be encouraged/forced to take economic risk is barkingly insane given the causes of the global financial meltdown. Whichever way you look at it the global financial meltdown, it was caused by excessive risk taking. Foolish people that lied on their self-certification mortgages to buy houses they couldn't afford based on the fallacy that "house prices will always go up". Reckless mortgage lenders that handed out £billions worth of these self-certification (liar loan) and 125% (idiot loan) mortgages. Reckless financial sector organisations that bought up $billions worth of these loans after they had been packaged up as Collateralised Debt Obligations and stamped with AAA ratings by the Credit Ratings Oligopoly, without ever actually bothering to do the slightest investigation into the toxic assets they were splurging so much cash on. Reckless financial insurance giants like AIG that insured $ trillions worth of these toxic mortgage backed securities with Credit Default Swaps without even investigating what exactly they were insuring: And last but not least, reckless governments and financial sector regulators that allowed this massive risk riddled property Ponzi scheme to inflate out of control despite repeated risk warnings from people like Nouriel Roubini, Paul Krugman, Brooksley Born, Steve Keen, Karl Levin, Joseph Stiglitz, Paul Moore, Jeffrey Sachs, Robert Gnaizda...

The whole credit crunch scenario has been created by excessive risk being followed up by severe risk aversion as capital has flowed away from risky high yield investments into extremely low yield investments like government bonds that are considered low risk. The idea that in the wake of the largest economic crisis ever, which was caused by excessive risk taking, the poorest and most vulnerable should be incentivised/forced to take more risk is absurd. Additionally the idea that the poorest elements in society should be forced to take risks, whilst the super-rich and the comfortably-rich hoard their cash and avoid risk at all cost is frankly revolting.

The next comment is the one that attracted the bulk of the criticism. In response to the idea that welfare ministers like himself should perhaps spend a week living on benefits to get an idea what it is really like he had this to say:
 "I have thought of the issue, the trouble is, it’s a stunt when someone like me does it because you do it for a week. That’s not the point. I think you don’t have to be the corpse to go to a funeral"
 Making a corpse based analogy with welfare claimants would be bad enough, but coming from a guy that preceded it with a load of inaccurate nonsense about welfare being a "lifestyle choice" it's awful. Either welfare recipients are choosing to be unemployed for the "lifestyle" as Freud implied or they have no choice in the matter. One generally does not have a choice to stop being a corpse.

Another factor that makes this statement so damned offensive is that it has been calculated that an average of 73 people a week are becoming corpses after having been found "fit for work" by welfare Work Capacity Assessments. The fact that so many people are dying after being found "fit for work" is a grave indictment of Tory welfare reforms, and the fact that Freud would talk so glibly about corpses when the policies of his own department are causing a scandal so outrageous that even the Daily Mail and their online readership are criticising it, demonstrates how completely out of touch with reality this man actually is.

Seeing as Freud started this hyperbolic and offensive analogy game, I'd like to offer my own alternative offensive analogy relating to welfare reform - "Perhaps the concentration camp guard is not the best qualified person to judge the morality of the Holocaust".

In the same article he then went on to whine about his relationship with Gordon Brown:
"[Gordon Brown] thought he could soften me up and then dump me in with his officials and I would just capitulate, which I thought was a pretty demeaning thing for a chancellor and prime minister-to-be, to think that was his role."
 This statement shows a quite remarkable lack of self-awareness. The man complains that he felt demeaned after Gordon Brown tried to derail his welfare reforms, yet is prepared to demean millions of welfare recipients by publicly comparing them to corpses.

So there are the main points of criticism about this revolting article, however there are grounds for many more, such as Freud's statement that he'd "be enormously pleased and gratified if my reforms were thought of in the same way as the Beveridge Report" alongside an admission that he hadn't even bothered to read it ("I have to confess... I didn’t read it all, it’s so fat") and his absurd suggestion that "It’s quite nice in a way that [these reforms are being pushed through by a "Government, which has got a strong Liberal Democrat presence" despite the fact that a tearful Liberal Democrat Sarah Teather had only days earlier described the reforms as "immoral", "deeply socially divisive" "horrible", "devastating" and "traumatic" and slammed the ministers involved as engaging in "a deliberate attempt to denigrate those who cannot find work".

Before I conclude I'd like to draw your attention to some other comments by Freud that received almost no press coverage, but reveal much about the man's true motivations. These remarks were made by Freud as he addressed the National Landlords Association conference. The NLA are an organisation that work to "support and protect the private residential landlord" - basically a lobby group for parasitic buy-to-let slumlords and the like. The most striking thing that he actually opened his address by thanking the private rental sector for playing a "remarkable role", providing the many extra homes that the social-rented sector was not able to offer.

He actually thanked the private landlords for enriching themselves at the expense of people that have been locked out of social housing by devastating attacks on the social housing sector by successive orthodox neoliberal governments. After a deliberate three decade long run-down of the social housing sector the private rental sector are soaking up an enormous proportion of the £23 billion a year in housing benefits payments, and instead of this mountain of cash going back to government as it does when housing benefits are used to pay social housing rents, the cash is being soaked away in profits for the idle rentier class.

Another quote demonstrates Freud's true priorities in forcing through "Universal Credit". He reassured the crowd of rentiers that:


"I am not expecting landlords to suffer sudden loss of income as a result of Universal Credit"


This statement perfectly sums up his objectives. He has absolutely no intention of clawing back the £billions in taxpayers cash that is used to prop up the parasitic private rental sector. This kind of taxpayer funded welfare is something that he absolutely intends to protect.

The cuts are going to be made to the living standards of the most desperate and vulnerable in order to force them into work, whether there are jobs to be had or not. He intends to collectively punish the weak and vulnerable recipients of taxpayer funded welfare whilst striving to protect the interests of the wealthy  recipients of taxpayer funded welfare.


After his address, landlords were allowed to ask questions of Lord Freud, one landlord asked a very important question about tenant migration from London to cheaper communities, putting huge pressure on local landlords, schools and healthcare in these areas (the "send them to Coventry" scenario). Freud's response to this question was quite remarkable, he "recognised that this needs to be researched". Freud has implicitly admitted that vast socio-economic consequences such as mass migration out of London and other wealthy cities has not even been researched yet. A breathtaking demonstration of the Tory contempt for the concept of evidence based analysis. Freud has basically said that "we'll analyse the adverse socio-economic consequences of this scheme as we implement it at the national scale"!

Another landlord question related to Article 4 Directions which limit the amount of Houses of Multiple Occupation (HMOs) in any given area. Basically the guy was asking whether limitations on the number of bedsits and massively overcrowded slum dwellings would be rescinded so that landlords could make more cash out of welfare recipients that are to be driven deep into poverty by the introduction of Universal Credit. Freud's response was even more mind-boggling than his promise to protect state subsidies for the private rental sector or his admission that the Universal Credit plans have been drawn up without conducting evidence based analysis; he said that he would look into rescinding Article 4 because:


"Article 4 seems to contradict the ethos of Universal Credit"

So there you have it, straight from the horse's mouth: The "ethos of Universal Credit" is to force desperate and vulnerable people into high occupancy dwellings like bedsits and overcrowded buy-to-let slums.

To conclude, Freud is a ruthless and insensitive individual, a man determined to have his own way no matter what the evidence or the opposition, a charlatan and a severe hypocrite. All the guff he talks about "looking after the most vulnerable" is a smokescreen. He perpetuates the myth that welfare is a lucrative "lifestyle choice" for the recipients, whilst promising to protect the vast taxpayer funded welfare payments that idle private landlords siphon out of the system: He whines pathetically about feeling demeaned when he came across someone that actually dared to stand up to him, yet makes corpse based analogies that demean millions of people that are, or have ever relied upon welfare: He demands that that economic risk should be forced upon the poorest in society "because they have the least to lose" and that the means to force them to take risk should be collective punishment: He openly admits that his department haven't even bothered to research negative socio-economic consequences that are so obvious that even private landlords that look set to gain from mass migration to their communities have raised concerns (not to mention dozens of politicians and journalists and hundreds of bloggers such as myself who have raised similar concerns): And he lets slip that the "ethos" of his reforms is to drive desperate people into the lowest possible quality of housing.

So look out for the lucrative private sector "Freud ethos slum" coming to an unemployment blackspot near you soon. I'm not so sure that the architect of the Welfare State, William Beveridge would be proud to have his name invoked as part of the justification narrative for this  ghettofication process under the guise of "welfare reform".

 
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