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Socialism for the rich and capitalism for the poor is a classical political-economic argument, stating that in the advanced capitalist societies state policies assure that more resources flow to the rich than to the poor, for example in form of transfer payments. The term corporate welfare is widely used to describe the bestowal of favorable treatment to particular corporations by the government. One of the most commonly raised forms of criticism are statements that the capitalist political economy toward large corporations allows them to "privatize profits and socialize losses."[1] The argument has been raised and cited on many occasions.

Contents

History and usage

The notion that banks privatize profits and socialize losses dates at least to the 19th century, as in this 1834 quote of Andrew Jackson:

I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. ... You are a den of vipers and thieves.
Andrew Jackson, 1834, on closing the Second Bank of the United States. From the original minutes of the Philadelphia committee of citizens sent to meet with President Jackson, February 1834, according to Stan V. Henkels, Andrew Jackson and the Bank of the United States, 1928 (unabridged form, extended citation)

The phrase may have been first popularized by Michael Harrington's 1962 book The Other America,[2][3]. However, Harrington is actually citing Charles Abrams,[4] well-known authority on housing.

Andrew Young has been cited for calling the U.S. system “socialism for the rich and free enterprise for the poor”, and Martin Luther King, Jr., who was assassinated in 1968, frequently used this wording in his speeches.[5][6] Since at least 1969, Gore Vidal has used the expression “free enterprise for the poor and socialism for the rich” to describe the U.S. economic policies.[7][8] Vidal used it as well since the 1980s for expressing his critique of Reagonomics.[9]

In winter 2006/2007, in response to criticism about oil imports from Venezuela, that country being under the leadership of Hugo Chávez, the founder and president of Citizens Energy Corporation Joseph P. Kennedy II countered with a critique of the U.S. system which he characterized as “a kind of socialism for the rich and free enterprise for the poor that leaves the most vulnerable out in the cold”.[10] Also Robert F. Kennedy, Jr. has become known for expressing to large audiences that America is now a land of “socialism for the rich and brutal capitalism for the poor”.[11]

Economist Dean Baker expressed similar views in his book The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, in which he pointed out several different policy areas in which government intervention is essential to preserving and enhancing wealth in the hands of a few.[12]

Also Noam Chomsky has criticized the way in which free market principles have been applied. He has argued that the wealthy use free-market rhetoric to justify imposing greater economic risk upon the lower classes, while being insulated from the rigours of the market by the political and economic advantages that such wealth affords.[13] He remarked, "the free market is socialism for the rich—[free] markets for the poor and state protection for the rich."[14]

Arguments along a similar line were raised in connection with the financial turmoil in 2008. With regard to the federal takeover of Fannie Mae and Freddie Mac, Ron Blackwell, chief economist of AFL-CIO, used the expression “Socialism for the rich and capitalism for the poor” to characterize the system.[15] In September 2008, the US Senator from Vermont, Democratic Socialist Bernie Sanders said regarding the bailout of the U.S. financial system: “This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor”.[16] The same month, economist Nouriel Roubini stated: “It is pathetic that Congress did not consult any of the many professional economists that have presented […] alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street”.[17]

Former U.S. Secretary of Labor Robert Reich adapted this phrase on The Daily Show on October 16, 2008: "We have Socialism for the Rich, and Capitalism for everyone else."[18]

Variations

  • Privatize profits/gains, and socialize risks/losses/debts
  • Markets, Free enterprise, private enterprise, and capitalism for the poor, while state protection and socialism for the rich

See also

Notes

  1. ^ Stealth Public Bailout of Countrywide: Privatize profits and socialize losses, Nouriel Roubini
  2. ^ Harrington 1962, p.170, quote: "socialism for the rich and private enterprise for the poor"
  3. ^ Robert P. Engvall (1996) The connections between poverty discourse and educational reform: When did “Reform” become synonymous with inattention? in The Urban Review Volume 28, Number 2 / June, 1996, pp. 141-163
  4. ^ Michael Harrington (1962) The Other America, p.58, quote: This is yet another case of "socialism for the rich and free enterprise for the poor," as described by Charles Abrams in the housing field
  5. ^ King's Light, Malcolm's Shadow, January 18, 1993
  6. ^ Thomas F. Jackson, Martin Luther King: From Civil Rights to Human Rights: Martin Luther King, Jr., and the Struggle for Economic Justice, ISBN 0812239695, 9780812239690, page 332
  7. ^ Gore Vidal: Reflections Upon a Sinking Ship, Little, Brown, 1969
  8. ^ Gore Vidal: Imperial America, September 1, 2004
  9. ^ 'Free enterprise for the poor, socialism for the rich': Vidal's claim gains leverage, irishtimes.com, September 20, 2008
  10. ^ Kennedy: U.S. oil companies profit; Citgo helps the poor, MetroWest Daily News, January 24, 2007
  11. ^ Mark Jacobson: American Jeremiad, New York Magazine, February 5, 2007, see page 4
  12. ^ Baker, Dean (2006). The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. Washington, D.C.: Center for Economic and Policy Research. ISBN 1411693957. http://conservativenannystate.org/.   Reviewed in: Scott Piatkowski: Socialism for the rich, www.rabble.ca, May 25, 2006
  13. ^ Takis Michas, "The Other Chomsky", Wall Street Journal, November 4, 2005. Reproduced on Chomsky's official site.
  14. ^ Noam Chomsky, "The Passion for Free Markets", Z Magazine, May 1997. Reproduced on Chomsky's official site.
  15. ^ Fannie/Freddie's “Socialism for Rich”, July 15, 2008
  16. ^ Sanders Op-Ed: Billions for Bailouts! Who Pays?, September 19, 2008
  17. ^ Nouriel Roubini: Nouriel Roubini's Global EconoMonitor, September 28, 2008
  18. ^ Interview with Jon Stewart, The Daily Show, Oct 16, 2008: Available at The Daily Show Site

References








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