America has long boasted a strong economy that has often influenced the global economy in a strong way. There are many factors to America’s strong and powerful economy, but the fact of the matter is that the United States operates under a corporate socialist model, meaning that large companies often receive grants and bailouts that intend to help serve the nation’s interest. While these bailouts are intended to create and sustain jobs in the United States, it is a sad reality that the rest of us experience a form of ruthless capitalism, while large companies receive billions of dollars in subsidies from the U.S. government. This article intends to outline the way in which the United States operates under a corporate socialist model through several examples.
Many conservatives are quick to denounce handouts to the poor. However, the United States actually spends a lot of money on handouts to rich companies. As The Hill writes, “What these criticisms of proposed reforms for wealth inequality fail to recognize is that socialism for the wealthy not only exists, but is prevalent throughout our current system of government in the form of corporate socialism” (3). The Hill continues saying, “Companies that have failed in the marketplace stick the taxpayers with their losses, but when they make money they get to keep it, and secondly, huge amounts of capital are given to companies by taxpayers…” (4) Our current system is broken, and as I mentioned in my other article, “Capitalism is Broken,” I have made it abundantly clear that these systems put in place are meant to help the rich and leave the rest of America wondering how to recover financially. While CEOs and billionaires are continuing to gain wealth even during a pandemic as millions of people are out of work, it makes you wonder if maybe if our loss is actually their gain.
A notable example of corporate socialism was the 2009 bailout of General Motors. As Reuters reports, “The U.S. government spent about $50 billion to bail out GM. As a result of the company’s 2009 bankruptcy, the government’s investment was converted to a 61 percent equity stake in the Detroit-based automaker, plus preferred shares and a loan” (1). This example, while extreme, shows the lengths the United States government is willing to go to maintain commerce and jobs in the United States. The unfortunate reality is that in the current economic system, poorly managed companies can expect a handout from the government. However, if an individual happens to mismanage their finances due to unforeseen circumstances, that individual can have their home foreclosed and their assets taken by a bank. This practice, while unethical, is commonplace in the United States, particularly during times of financial turmoil.
Another example of corporate socialism is the United States’ plentiful farm subsidies. According to The Balance, “Fifty people on the Forbes 400 list of the wealthiest Americans received farm subsidies... On the other hand, 62 percent of U.S. farms did not receive any subsidies” (2). This type of inequality shows how unethical these subsidies are. 50 people from the Forbes list of the 400 richest Americans received some farm subsidies, while 62 percent of American farms received $0 in subsidies. This inequality shows just how the American economic system gives out handouts to the rich while leaving the rest of us to pick up the bill.
As we continue to analyze and understand our economic system, several things are clear. The system is designed to benefit the rich while the poorest in our societies work hard to make ends meet. America must do better and while I do not think government intervention is the answer, I believe the answer will come through deep political, societal and economic change.