These government champions of the free-market are living a lie, stripping social-spending while shelling out billions to the private sector, all while taking home benefits the rest of us could only dream of. The private sector has its own government dole system, writes editor-in-chief, Claire Connelly. If these companies are so troubled by government welfare, they should pay back every cent of government bailouts, tax credits and subsidies they have received over the years.

Illustration by Rachael Bolton

To the elected darlings of the free market: I hate to burst your bubble but – you have been living a lie. Your lifetime government pensions: socialism. Overly generous retirement packages, Superannuation and 401ks: socialism. Travel budgets, expense accounts, access to private drivers and town cars, government reimbursement for travel and living arrangements: socialism, socialism, socialism, socialism, socialism.

Central banking: socialism. Not to mention fossil-fuel & mining subsidies and tax concessions: socialism, socialism, socialism.

The bank bail-outs of 2008: One of the greatest acts of socialism of all time. Where were our free-market representatives then? When the financial system went into melt-down, the banks were not told to suck it up and stand on their own two feet. More than a trillion dollars were poured into the banks, most of which went towards profit margins and CEO bonuses. 

These so-called champions of capitalism have the nerve to claim that it is social welfare recipients that are a drain on the system while government representatives take home all kinds of state-provided benefits the rest of us could only dream of: the best health insurance the country has to offer, lifetime pensions and generous retirement packages which drain many more billions from the economy than social welfare ever will. Moreover, corporate welfare pales in comparison to either.

The private sector has its own dole system paid for by Federal Governments. Yet many Congressmen, Representatives and MPs still have the nerve to stand before the people who elected them and rail against social spending, claiming people ought to pull themselves up by their bootstraps when no such obligation has ever existed for the corporate sector. Most of the world’s most successful corporations don’t get out of bed without a subsidy.

According to the Good Jobs First report by Philip Mattera, three-quarters of all state economic development subsidies went to just 965 corporations since the beginning of the study in 1976. The Fortune 500 corporations alone accounted for more than 16,000 subsidy awards, worth $63 billion – mostly in the form of tax breaks.

In the UK the private sector received more than £176 billion in tax credits from the Federal Government between 2003-2004 and 2010-2011 to subsidise underpaid workforces, all while posting record profits.

On of the UK’s wealthiest parliamentarians, Conservative MP Richard Benyon received £120,000 a year through housing benefits collected off his tenants, despite having condemned social security for “rising inexorably and unaffordably”.

In 2012, £4 billion of public money was pocketed by four of Britain’s biggest private contractors: Serco, G4S, Atos and Capita, which pay little to no corporation tax while benefiting from the benevolence of state spending.

So much for the power of the free market.

There are many examples of socialism in action, most of it goes to the private sector and federal employees.

Yahoo receives $2 million for every job it creates in Lockport New York. Alcoa receives $5.6 billion in electricity discounts from New York State. Boeing received $900 billion to build a plant in South Carolina.

US & China fossil fuel subsidies exceed $20 billion annually, even though, according to a Council on Foreign Relations report, eliminating three major federal subsidies would have a limited impact on the production and consumption of fossil fuels.

Banking subsidies topped $70 billion in the US in 2012, according to an IMF report. $300 billion in the Eurozone. A socially damaging form of socialism.

In Australia fossil fuel subsidies earn anywhere between $9-$12 billion according to Guy Pearse, Bob Burton and David McKnight. And the WestConnex program received $16 billion in government subsidies to build a toll road whose profits will go to a private company once completed.

In a true free-market economy, these companies would have to raise their own damn funds.

In the US, entitlement programs cost 92% of federal revenues, according to Forbes. And according to the House and Senate Appropriations Committees, total legislative branch appropriations was about $4.1 billion in 2014. If socialism is so destructive to the economy, to quote Jebediah Bartlet: can we have that money back please?

These free-market champions should pay back every cent they have welched off the public purse. But they won’t because they’re in such denial.

Last year, President and CEO of the US Chamber of Commerce, Thomas J Donohue wrote that “socialism is a dangerous path for America”. He made $4.7 million in 2010, $3.6 million of which was a government bonus. All while the rest of the country is seeing lower wages and higher unemployment not seen since WWII.

Australian Treasurer, Scott Morrison, who last week accused opposition leader Bill Shorten of ‘socialist revisionism’ received a 2% pay rise to $380,662 a year, while the rest of the country hasn’t seen a pay increase for the better part of 15 years. This along with 20% superannuation, a lifetime government pension, an expense account and government-funded travel. He is also a beneficiary of the Morrison Family Trust, and is the director of a company called Morrison Strategic Advisory Services. No conflict of interest there, no siree. Also, accusing the Australian Labour Party – which has a broad-neoliberal consensus – of socialist revisionism is just silly.

British Conservative backbencher Jacob Rees-Mogg referred to Grenfell Towers as the “physical embodiment of socialism” while taking home an annual government salary of around £204,000  and also claiming allowances to cover the costs of running an office, employing staff, maintaining a constituency and London residence. He also still draws a salary from his investment firm which has earned him at least £4 million during his seven years in Parliament.

So why is socialism such a dangerous concept? Because it proves there is another way of structuring an economy that pays dividends. (And our elected leaders should know, they already benefit from such a system).

What is socialism?

At its heart, the essence socialism is the liberation of working people from exploitation. Under true socialism, workers own the means of production. And the state exists to organise the production and distribution of good and services. Under a true Marxist economy, the role of the state would eventually wither away leaving an economic body to organise production and distribution. Few, if any, ‘socialist’ countries have reached that point, as all countries need checks and balances on internal revolt and/ or exploitation by the dominant class.

Neither Australia, The UK, The US, or Canada have economies that in any way resemble proper socialism. The UK, Canada and Australia are mixed economies. Though America leans more towards hard-capitalism,  corporate welfarism is alive and well in all four countries, and many more like them. Though in America, the introduction of health insurance (thanks Obama), and a minimum wage in some states, the country is beginning to take steps towards the social democracies offered in other developed nations.

Of course, capitalism itself is not without its contradictions:

No, Nazi Germany wasn’t socialist, and neither was Lenin

Ever since the term was coined, ‘socialism’ has been adopted as a propaganda tool that disguises ulterior motives.

The west uses socialism as a pejorative against the Soviet Union. The Eastern Bloc usesd it to disguise fascism and totalitarianism.

Just because it called itself the National Socialist German Workers’ Party doesn’t mean the Nazi Party was socialist. Socialism is an excellent name to give your party if you’re trying to hide your brutality.

And calling the North Korean government the Democratic People’s Republic, or China the People’s Republic does not in any way make the countries democratic, let alone run by the will of the people. The only accurate word in either of those government titles is ‘Republic’. They are, as the word implies, not sovereign to a crown.

Likewise, ‘socialism’ was a politically convenient way for Lenin to take advantage of civic restlessness resulting from the popular uprising of the Russian Revolution of 1917. It became a tool to disguise his rampant totalitarianism. He could claim to be the ruler of the working man while cracking skulls, deconstructing citizens assemblies and workers unions oh, and murdering millions of people.

Also, socialism didn’t destroy the Russian economy, that was capitalism.

Up until 1989 the Soviet Union was a second-world country. 10 years of capitalist reforms drove it right back into the third world.

Part of the demonisation of the Soviet Union was due to its success in modernising its economy in a way that was – and is – almost entirely self-sufficient. This is what bothers the West so much about the Soviet Union, it presents a model for economic success that doesn’t rely on trade or globalisation.

It is not socialism by any stretch of the imagination, and to call it democratic would be overly generous, but it is a nation that is far more concerned about the benefits of local growth than the US, Australia and the UK combined.

What is capitalism?

Capitalism is an economy in which the means of production are privately owned and operate for profit. Neoliberal capitalism actively hides one of the key factors of production when modelling the economy. That factor is land.

In a truly capitalist society there would be no government or central bank to bail the banks out of their own mistakes and companies would have to raise the cash for any of their business ventures on their own.

A truly free market is Darwinian in nature, good investments are rewarded, bad investments are punished with bankruptcy and those who fail, rightly, disappear. We are very far from that system or those principles today.

So in a system that is too big to fail, all the tenets of capitalism evaporate in favour of government insurance. Which, when you think about it, is, well, socialism.

Just remember when you hear your elected leaders lobby for the virtue of the free market that what they’re really saying is: ‘Capitalism is for other people’.

Governments will insure gold, wheat and banking reserves. But until very recently, in the US, it didn’t extend that right to the humans whose productivity keeps the economy alive.

Corporate socialism is what drives banking profits. Even the IMF admits it. A report from 2014 found that implicit government insurance led US major banks to borrow at lower rates and take bigger risks. It calculated the implicit subsidy represented up to $70 billion US dollars and $300 billion Euros in the Eurozone.

According to Bloomberg Businessweek, implicit taxpayer subsidies for the banking industry  are estimated to cost more than $80 billion per year globally.

It takes a stunning kind of arrogance to sneer at the public and claim that the government cannot – and should not – do anything to insure the economic well being for the greatest number of citizens while simultaneously expecting people to vote for you.

If the free-market is so important, why run for government at all? Why even have government?

“Vote for me, I won’t lift a finger to help you” is the slogan of conservative parties everywhere, and, for the most part, Labor, The Democrats and at least half of British Labour as well.

If the political system were honest with its constituents, CEOs would vote and the rest of us would stay home.

The private sector has always had its concerns about democracy and anything standing in the way of profit, evidenced by two major fascist coup plots, the first organised and funded by some of the US’ wealthiest institutions including JP Morgan and Du Pont, the second against Churchill, organised by the UK’s wealthiest aristocrats.

Lewis F Powell, Associate Justice of the Supreme Court of the United States wrote a memo to President Nixon in 1971 titled “Attack on the American Free Enterprise System,” in response to rising countercultures such as The Black Panthers, Women’s Suffrage, the Hippie and gay rights movements.

In it he warned that business was losing control over the citizenry and that “No thoughtful person can question that the American economic system is under broad attack,” he wrote.

Powell encouraged the business community to take back control by funding and staffing universities, and called on the Chamber of Commerce to protect big business with sustained political representation on its appointment called for the Chamber to establish a staff of free-market scholars and speakers who could represent American business interests at the highest level. It also audited economics, social science and political textbooks for any dissenting opinions which might influence young minds to rebel, later down the road.

The Powell Memo became a playbook to perpetuate so called free-market ideas throughout government, public and private sectors, and even schools and entertainment industries.

We are living proof of the 40-year ‘success’ of the Powell Doctrine. It has been a total failure – unless you’re a socialist.

These days the private sector doesn’t need to stage a coup. It simply gets itself elected. Trump’s cabinet is made up of investment bankers, venture capitalists and Wall Street insiders.

The Secretary of Commerce, Wilbur Ross was a former investment banker nicknamed “the king of bankruptcy” for his successful business model of buying up dying companies in declining industries and flipping them for a profit. Elaine Chao, secretary of transportation is the daughter of a Taiwanese shipping magnate and former banker and Reaganite who also served under both Bushes as Deputy Secretary of Transportation and Secretary of Labor, respectively. Steven Mnuchin, Treasury Secretary is a former Goldman Sachs partner and founder of Dune Capital Management hedge fund. Gary Cohn, National Economic Council Director and Chief Economic Advisor to Trump is a Goldman Sachs veteran of 25-years and former COO of the investment bank. Rex Tillerson, secretary of state, is the former CEO of ExxonMobil.

We need another (better) New Deal

Like it or not, without The New Deal America – and the world – wouldn’t have had the infrastructure, the knowledge, the population – or the capital – that led to such staggering financial growth over the 70s, 80s and 90s.

The 99% will not be able to obtain that level of prosperity again without government intervention. (Tangent: The kind that doesn’t systemically exclude African Americans like it did the last time). Do less achieve more. If socialism is good enough for the private sector, it is surely good enough for the people whose interests governments are supposed to represent.

We cannot have it both ways. If banks are too big to fail, then the people they lend to should be entitled to the same protection as the profits their debts generate.

There’s nothing particularly moral about democratic socialism. It is simply good economics.

This is an edited piece which originally appeared on Hello Humans and was reproduced with permission of the author. Subscribe for only $1 a month. 

Claire Connelly

Claire Connelly

Claire Connelly is the editor-in-chief of Renegade Inc. An award-winning freelance journalist and speaker, she is the founder of Hello Humans, an experiment in subscription journalism starting at just $1 a month. https://www.patreon.com/hello_humans

Specialising in economics, technology and policy, Connelly is working on her first book and podcast series, How the World Really Works*. (*Title may be due to change). You can pre-order a copy here. #shamelessselfpromotion.

With more than a decade of experience under her belt, Claire has written for leading publications including The Australian Financial Review, The Saturday Paper, ABC, SBS, Crikey, New Matilda, VICE & others. She is the co-host of The Week In Start-Ups Australia, and features regularly as a commentator on TV and radio shows including Radio National's Download This Show, ABC's The Drum, Ten's The Project, and more.

How do you spend your days?

I am the editor-in-chief of Renegade and founder of Hello Humans, a subscription journalism experiment. I also freelance & consult for a number of publications of the editorial and commercial variety.I work from home. I am a bit of a work-hermit. I can mostly be found on the internet and at the dog park.

Why is this important to you?

Now more than ever, it is really important to make sense of the world around us. But in an age of information saturation it is becoming harder to distinguish the truth from bullshit. Part of the reason I am doing this is to help people differentiate between the truth and narratives being sold by people and organisations with vested interests.

I want to help people identify rhetorical red flags and immunise themselves against a sea of bullshit.

What drove you to focus on journalism?

I guess you could say my parents played a fairly big part in my becoming a journalist, much to their despair. Watching the news, reading the paper and listening to the radio was a compulsory activity in my household. My parents read me the paper before I could read.

Being engaged in the world around us was the way we repaid our debt to society.

They channelled the last of their politically active twenties and thirties into fostering our curiosity and distrust of authority. It wasn’t until I reached university that I fell in love with economics, politics and international relations.

Was there a particular moment you can remember that led you to this field?

The day Israeli Prime Minister, Yitzchak Rabin was assassinated, (the 4th of November 1995). I was 10. It was a weekend and I was in my winter school uniform complete with pinafor and scratchy tights. I played clarinet in the school orchestra and we were due to play at the old folks home. And I was pissed. And I said so.

The phone rang, and with tears rolling down her face, my mum turned to me and said the concert had been cancelled. Yitzhak Rabin, the Israeli Prime Minister had been killed.

I threw my stuff down and turned to get changed. But before I could my mum grabbed me firmly. I will never forget the look of disappointment on her face. She made some comment about how Rabin did not die for my convenience.
“You live in this house, you have clothes on your back and warm blankets and three square meals a day. You may not do anything with your education that we pay for, but you will be informed.”
She sat me down in front of the ABC and made me watch eight hours of assassination coverage. Little had I known the world was falling apart.

That day pretty much sealed my fate.

You can read more it here if you are interested.

What drives you professionally?

Justice. Egomania. Curiosity. And the fact there is no other profession more suited to my personality.

In your opinion what are the three biggest problems facing the developed and developing world?

Neoliberalism. Economic and social instability and insecurity. Banking fraud. Climate change. (Ok that’s four things. I never was very good at lists).

If you hadn’t become a journalist what would you have done?

My mum wishes I had studied law.

What led us to this moment in history?

We are living proof of a 30 year operation to permanently reduce the responsibility ofgovernment over the wellbeing of its constituents. You can read more about that here. (Link to neoliberalism piece).

What are the lessons we failed to learn during and since the 2008 crisis?

Austerity is a means of redistributing the profits in of productivity in which we all used to share to the world’s uber-wealthy.

The global financial crisis was one small step for man, one giant leap for the banking industry. It cemented financial crises as a permanent phenomenon and the formalisation of corporate revolution.

It signalled to the world that government exists only to support the private sector, triggering a wave of disillusionment which allowed neoliberalism to complete its task at hand: the complete and utter destruction of democracy, replacing it with a market society in which economics permeates every facet of modern life, from education to healthcare to law & order.

Even the military operates as a for-profit model, conveniently privatising any activity that sits outside the criminal justice system.

Some call the bail-outs of 2008 a failure of neo-liberalism. To the contrary, the private sector attained almost exactly what it set out to achieve: a system with no obligation to true economic recovery, that supports only profits and the corporations which generate them.

We keep voting for wealthy populist leaders thinking the knock-on-effects will put dollars in our pocket when the very opposite is true.

So long as voters continue to accept the mythic propaganda sown over the last 30 years that tax breaks & subsidies create jobs, deficits are bad, surpluses are good and that any instability is somehow the fault of the poor, our economic insecurity will only continue to increase.

Can you list some ‘baby steps’ out of the current economic mess?

A return to full employment.

A royal commission into the continuation of subprime mortgage fraud. (It didn’t go away after the GFC. In fact it was pretty much legalised).

Slash the cost of university degrees & create new pathways for the unemployed and underemployed to attain new skills and education.

Deficit spending to create infrastructure that will create the jobs of the future.

Support local agriculture.

Reduce private debt.


If you were a President / Prime Minister what would your first three pieces of policy be?

A job guarantee.
Re-introduce a price on carbon.
Legalise gay marriage.

Tell us something you have been wrong about?

I didn’t think that in 2017 that gay marriage and abortion would still be illegal in Australia.
Claire Connelly

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