On this World Day of Social Justice, I’ve decided to highlight a troubling practice at the heart of capitalism, that is, the practice of socializing losses and privatizing gains. While it is certainly not the only inequitable pattern in capitalism, this flow of money from the government (public) to private corporations and wealthy citizens underlies many social injustices. For instance, it undermines the government’s capacity to create strong social protections such as robust systems for health care, pharma care, dental care, education, child care, senior care, and work inspections.
Here’s the thing. Privatizing profits and socializing losses means that a company’s profit earnings can go to shareholders while passing part (or all) of the losses to society (to taxpayers). It’s a practice that often occurs through government interventions such as bailouts, subsidies or cost-sharing arrangements for infrastructure projects where the public takes on the risks of any losses. Some examples include subsidies to the oil sector, the government paying for environmental clean-ups, and financial supports to banks during the 2008-2009 Financial Crisis.
Let’s take a quick look at the Financial Crisis. Although Canadian banks remained relatively stable, the federal government still provided billions of dollars in support by purchasing mortgage assets from banks. This action seemed to be based on the assumption that allowing banks to collapse would cause widespread economic downturns and have much worse impacts on the working population than the rescues. However, the fact that banks continued to pay dividends to shareholders and award executive bonuses during this time, seems to suggest that this was about more than simply lessening any impact on the working population.
Maybe it’s time we all do a little more thinking about how our economy works. Then we might be motivated to act for change.
-Sister Sue Wilson, CSJ
Image: Greg Rosenke @greg_rosenke/Unsplash
