Capitalism for the poor, Socialism for the rich

The deep sense of injustice growing across the world is closely linked to the rise of inequality.

The gap between rich and poor is increasing, shrinking the middle class and forcing more and more people into desperate situations.

While much of the blame for rising inequality has been put on the capitalist free market system, too little has been focused on the actions of politicians and governments.

Though it is imperfect, capitalism has helped create a world of technological advancement and opportunity. As one example, without the competition inherent in capitalism it’s difficult to imagine advanced smartphones being as powerful or as widely available as they are today. Imagine if smartphone design had been left up to politicians.

The key with capitalism is to acknowledge its benefits while mitigating the negatives. Capitalism creates winners and losers, and a certain level of inequality is inherent in the system. Some inequality is necessary, since most people need at least some profit motive as an incentive.

The government’s job is not to pick the winners and losers, but to help those who the system leaves out. That’s why certain things should be taken out of the market, or subsidized to create equal access. Access to healthcare and quality education should not be determined by ability to pay, because those are essentials to having a chance to live a good life and succeed. That’s why some things should be “socialized.”

This brings us to where we are today. Over time, politicians and governments have turned the system upside down. Low-income and middle class people are thrown into the capitalist system and often left to fend for themselves if they run into trouble. Yet, rich corporations and banks receive massive subsidies and tax breaks, which stifles competition, crushes opportunity, and gives already big and powerful institutions an unfair head start.

To make matters worse, when big and powerful institutions still fail despite all their advantages, the government steps in with a bailout. Now, some banks are asking for even more bailouts.

This is precisely the opposite of how things should be. Politicians and governments have a responsibility to help those who are struggling, to provide people a hand up when they need it. When people in need are ignored yet the rich and powerful get help at every turn, it’s no wonder that public anger is rising.

Think of all the bank bailouts and tax breaks that politicians give out with your money. Governments give out money to finance the construction of stadiums and arenas, even though the owners of those stadiums are often billionaires.

Where is the bailout for low-income and middle class people? Why are politicians fine with you living paycheck to paycheck, stressed out and one unexpected expense away from financial disaster? And why do they come running the second a bank or big business calls?

People feel like the system is rigged, and it is. Those with wealth and power often operate with either a written or implied security blanket from the government, while everyone else struggles in fear.

The powerful get the security of socialism, the rest of us get the competition of capitalism.

This is not sustainable. The longer it goes on the more people will get angry and lose any remaining faith in the system. We’ve already seen how demagogues and authoritarians utilize that anger to divide people and gain power. Societies that become extremely unequal inevitably correct that problem, but the process of correction has often taken place only after massive human suffering.

With the benefit of history, we can take steps to avoid that suffering and fix the broken system. Here are 3 things we can do.

1) Implement Universal Income Security for all citizens

By providing every citizen with a certain level of income below which they cannot fall, we can eliminate poverty, provide a strong boost to the economy, and free working people from the climate of fear and desperation that lets some employers take advantage of people. This idea is alternately referred to as a Universal Basic Income, Minimum Income, or Guaranteed Income. That said, we will need to make sure a universial income is implemented in a way that always rewards work, rather than the punishing initiative and encouraging dependence like the welfare system often does.

2) Make Post-Secondary Education free

With post-secondary degrees now needed for more and more jobs, access to education is essential for expanding opportunity and equality. The fact that low-income and middle-income people are forced into massive levels of debt just to get an education is unacceptable, and is one of the drivers of inequality. However, free post-secondary also requires a change in how we look at post-secondary education. We can’t keep funnelling taxpayer money into the same system that has failed so often. We need to open up accrediation and utilize the endless info available online to rethink what education means.

3) Embrace change

The dynamic nature of the capitalist system (when it is truly competitive and big companies don’t get special favours from the government), creates amazing innovation and life-changing advancements. Governments should not try to skew that development or control what kind of innovations happen.

Politicians can’t even balance their own government budgets, so why should they try to manage a massive and complex economy? What the government should do is – as I wrote above – ensure that no citizen falls into poverty, and make sure that access to the skills needed to succeed in the economy are available to all, regardless of ability to pay.

This is not a tough problem to solve. All it takes is political will, and a recognition that capitalism for the poor and socialism for the rich is wrong. We need a balance between both, that empowers individuals and businesses to innovate and grow, while providing all citizens with security and opportunity.


Read more about how we can provide income security for all.


Photo credit: Jacob Bøtter

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