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 the 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." The argument has been raised and cited on many occasions.
History and usage
The phrase may have been first popularized by Michael Harrington's 1962 book The Other America in which Harrington cited Charles Abrams, a well-known authority on housing.
Andrew Young has been cited for calling the United States system “socialism for the rich and free enterprise for the poor”, and Martin Luther King, Jr. frequently used this wording in his speeches. Since at least 1969, Gore Vidal used the expression “free enterprise for the poor and socialism for the rich” to describe the U.S. economic policies, and he used it from the 1980s in his critiques of Reaganomics.
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”. Also Robert F. Kennedy, Jr.
has become known for expressing to large audiences that the United
States is now a land of “socialism for the rich and brutal capitalism
for the poor”.
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.
Linguist 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. He remarked, "the free market is socialism for the rich—[free] markets for the poor and state protection for the rich." He has stated that the rich and powerful "want to be able to run the nanny state" so that "when they are in trouble the taxpayer will bail them out", citing "too big to fail" as an example.
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. In September 2008, the US Senator 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”. 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”.
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."
Journalist John Pilger included the phrase in his speech accepting Australia's human rights award, the Sydney Peace Prize,
on 5th November 2009: "Democracy has become a business plan, with a
bottom line for every human activity, every dream, every decency, every
hope. The main parliamentary parties are now devoted to the same
economic policies - socialism for the rich, capitalism for the poor -
and the same foreign policy of servility to endless war. This is not
democracy. It is to politics what McDonald's is to food."
U.S. Senator Bernie Sanders
referenced the phrase during his eight-and-a-half-hour speech on the
senate floor on December 10, 2010 against the continuation of Bush-era
tax cuts, when speaking on the federal bailout of major financial institutions at a time when small-businesses were being denied loans.
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
